Good news for first-time buyers. There are more 95% mortgage deals available now as lenders strive to help more people get onto the property ladder.
Saving up a large deposit can feel like the biggest obstacle for first-time buyers. But with various lenders offering 95% mortgages, getting on the property ladder with just a 5% deposit may now be more achievable than many people realise.
Some of the UK’s biggest mortgage lenders are providing options for buyers with smaller deposits, helping more people take that first step into homeownership.
Lloyds Banking Group has just announced a new mortgage option designed specifically for first-time buyers struggling to save a large deposit.
From 18 May, eligible buyers applying through Lloyds Bank, Halifax or Bank of Scotland may be able to purchase a home with a deposit starting from just £5,000.
The scheme is available for properties worth up to £300,000 and is aimed at first-time buyers who may otherwise feel priced out of the market.
To be eligible, buyers must generally:
- Be purchasing their first home
- Be buying a property worth up to £300,000
- Have a minimum deposit of £5000
- Be employed or self-employed
- Be purchasing a residential property
If you are buying jointly, at least one applicant must be a first-time buyer.
This mortgage is not available for shared-ownership properties, new-build homes, or gifted deposits.
According to UK Finance figures published in May 2025, the average first-time buyer household without family financial support had an income of £65,351 and bought a property worth £279,381.
With a standard 5% deposit, that would normally require savings of around £14,000.
Saving for a deposit
Amanda Bryden, Head of Halifax Intermediaries and Scottish Widows Bank, said that saving for a deposit is one of the biggest challenges facing first-time buyers.
‘We recognise our responsibilities as a lender to ensure loans are affordable – not just now, but in the future for all our borrowers,’ says Bryden. ‘With this new offer, brokers have a new option for buyers who have shown their ability to manage their finances, save for a deposit themselves and who are taking the greater certainty of a longer-term fixed rate.
‘A lower deposit can make it easier to save for a deposit for many, or it can help free up cash for other costs, like conveyancing or setting up your new home the way you want it,’ Bryden adds.
At MB Associates, we often help first-time buyers with smaller deposits. Not everyone has access to the Bank of Mum and Dad, but that doesn’t necessarily mean buying a home is out of reach.
Other lenders already offer 95% mortgages, meaning buyers may only need a 5% deposit.
For example, NatWest says its 95% mortgage products are generally available on a repayment basis for properties worth less than £600,000.
Lenders helping first-time buyers
In the last few months, there has been an increase in lenders offering mortgages with smaller deposits. The number of 5% or 10% deposit mortgages has risen to its highest level since 2008, according to Moneyfacts. In April, Moneyfacts reported there were 442 mortgage products for 5% deposits, compared to just 204 two years ago.
There are even deals where it’s possible to borrow up to 98% of the purchase price. There’s also such a thing as 100% mortgages, where no deposit is required. These usually involve a family member replacing part or all of a deposit as security for a mortgage.
These are known as Family Mortgages or Family Backed Mortgages. Sometimes also called a ‘joint borrower sole proprietor’ mortgage, it means you can add a second person to the mortgage without them owning the property. Both the property owner and the non-owner would be responsible for the mortgage. Clearly, it’s a decision that needs careful consideration, especially for the person providing security.
Higher rates and repayments
While smaller deposit mortgages can help buyers get onto the property ladder sooner, it’s important to understand that they may come with higher monthly repayments. In addition, they will have higher interest rates compared with larger deposit mortgages.
Every lender has different criteria, and finding the right mortgage can make a significant difference to both affordability and long-term costs. It’s important to seek advice, as with a low deposit, there are risks – such as negative equity, where the amount you owe on the mortgage could be less than the property’s value. Bespoke advice is crucial.
If you are thinking about buying your first home and want to know how much deposit you may need, we’re here to help.