5% Mortgages

What is a 5% deposit mortgage?

A 5% deposit mortgage allows you to buy a property with just 5% of the purchase price as a deposit, while borrowing the remaining 95% from a lender. These mortgages are commonly referred to as 95% Loan-to-Value (LTV) mortgages.

The Government’s 5% Deposit Mortgage Scheme

In April 2021, the UK government launched a mortgage guarantee scheme to help buyers with small deposits get onto the property ladder.

• The scheme encouraged banks and building societies to offer 95% mortgages by providing a government guarantee on the top portion of the loan (80-95% LTV).
• It was available to first-time buyers and home movers purchasing properties worth up to £600,000.
• It ended in December 2022, but some lenders continue to offer 5% deposit mortgages independently.

Are 5% deposit mortgages still available?

Yes! Even though the government-backed scheme has ended, many banks still provide 95% mortgages. However, lenders now have stricter criteria, and some may require a strong credit history or a higher income.

Things to Consider Before Choosing a 5% Deposit Mortgage:

1. Higher Interest Rates – Since you’re borrowing most of the property’s value, lenders charge higher interest rates compared to lower LTV mortgages.
2. Risk of Negative Equity – If house prices drop, you may owe more than your home is worth, making it harder to remortgage or sell.
3. Limited Lender Choice – Fewer lenders offer 95% mortgages compared to lower LTV options, meaning less choice in rates and terms.
4. Stricter Lending Criteria – Some lenders require higher credit scores or additional affordability checks.

Alternatives to a 5% Deposit Mortgage

If you’re struggling to save a larger deposit, consider:

• Help to Buy Equity Loan (ended in 2023, but some alternatives exist for first-time buyers)
• Shared Ownership schemes (buy a share of a property and pay rent on the rest)
• Guarantor mortgages (a family member guarantees the mortgage)
• Saving for a 10% deposit, which unlocks better mortgage rates

How to Get a 5% Deposit Mortgage

Even though some lenders still offer 5% deposit mortgages, each has different requirements. Speaking to a mortgage broker can help you find the best options based on your income, credit history, and property preferences.

For the most up-to-date 5% mortgage deals, get in touch with us today!