{"id":141512,"date":"2018-10-19T12:35:30","date_gmt":"2018-10-19T11:35:30","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=141512"},"modified":"2025-04-15T09:52:58","modified_gmt":"2025-04-15T08:52:58","slug":"low-deposit-mortgages","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/mortgages\/low-deposit-mortgages","title":{"rendered":"Low deposit mortgages"},"content":{"rendered":"

It\u2019s common for home buyers to wonder what options are available to them with a low deposit.<\/p>

The good news is: there are plenty of options in the current housing market, although what\u2019s available to you will depend on your other circumstances.<\/p>

Below, we have outlined the options available to home buyers with a small deposit.<\/p>

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\n \n \n <\/circle>\n <\/path>\n <\/svg>\n <\/span>\n Mortgage Guarantee Scheme scheme for 91-95% loan-to-value mortgages<\/span>\n <\/h4>\n
\n \n\nSince 2021, the government has been running support in various guises for mortgages where the buyer has less than a 10% deposit to put down. The current Mortgage Guarantee Scheme became permanent in July 2025. Under the scheme, the government can effectively act as a guarantor for a part of the borrowing \u2013 promising to pay that part of the debt back if the borrower defaults. The hope is that it'll be viable for banks to offer 95% loan-to-value (LTV) mortgages (which had previously disappeared from the market). The government only offers this to first-time buyers and home movers where the value of the property is no more than \u00a3600,000, and it's not a new build. You don't need to do anything \u2013 the lenders simply build the scheme into their products. Learn more about the scheme<\/a>.\n\n\n <\/div>\n <\/div>\n<\/div>\n
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.<\/div><\/article>

How small can my deposit be?<\/h3>

Most lenders prefer that you have a deposit that is at least 20% of the property\u2019s value. This means that you\u2019ll get a mortgage of a loan-to-value (LTV) ratio<\/a> of 80%, which is the amount you can borrow as a percentage of the property value. For lenders, the larger the deposit you can pay up-front, the less risk you pose. For you, it usually ensures that you get the lowest interest rates, and as a result have lower monthly repayments.<\/p>

However, many people struggle to save that much, especially first-time buyers. This is why more lenders now offer low deposit loans that come with a high LTV of 90% or 95%. This means you can potentially get a mortgage with just a 10% or 5% deposit. For example, if you\u2019re buying a \u00a3250,000 property, a 20% deposit is \u00a350,000. A 5% deposit is just \u00a312,500. That\u2019s a big difference.<\/p>

While it\u2019s possible to get 100% mortgages<\/a> \u2013 mortgages with no deposit \u2013 these require special circumstances.<\/p>

The low deposit trap: Be sure you have cash to cover all your costs<\/h4>

Saving a 5% deposit is obviously much easier than saving a 20% deposit. But you need to make sure you have money saved up to cover all your other home buying costs. This can include up-front lender\u2019s fees, solicitor\u2019s fees and stamp duty.<\/p><\/div><\/article>

Is it harder to get approved for a low deposit mortgage?<\/h3>

\"HomeWhile the banks might advertise that you can borrow up to 95% of the purchase price of your new home, it\u2019s important to realise that you\u2019ll have to meet some lending criteria.<\/p>

  • Good credit history.<\/strong> In order to get your loan approved at a high LTV like 95%, you will need to have a clean credit history. This means you should have no defaults showing on your credit report for missed payments on other bills.<\/li>
  • Good employment history.<\/strong> Some lenders require you to have spent as much as three years in the same job before offering you a mortgage, while some may ask for as little as three months. In the case of low deposit mortgages it\u2019s likely that most providers will want you to be able to show that you have a stable job.<\/li>
  • Genuine savings.<\/strong> If you can show where your 5% savings came from, this will go in your favour. For example, showing your savings account statements with regular deposits going into it will be viewed positively.<\/li>
  • Controlled debts.<\/strong> If you submit your mortgage application and it shows that you have several credit cards, a car loan and a personal loan all outstanding, it\u2019s likely your loan will be declined. Consolidate your debts and pay off the most urgent ones. For example, credit card debt is a bigger red flag for a lender than a student loan.<\/li><\/ul>