A low deposit mortgage may help you buy a home with a smaller upfront deposit, often from 5% of the property price, subject to lender criteria, affordability, credit history and property type.
For many buyers, saving the deposit is the hardest part of buying a home. You may have a steady income and feel ready to manage monthly repayments, but property prices, rent and everyday costs can make it difficult to build a larger deposit quickly.
This guide explains how low deposit mortgages work in the UK, including 5% deposit mortgages, 95% loan-to-value mortgages, family-assisted options, Shared Ownership, new-build considerations and no-deposit alternatives.
Connect Experts helps you find a mortgage adviser near you by location, language, gender and mortgage expertise. The adviser you choose can explain which low-deposit mortgage options may fit your circumstances.
What Is a Low Deposit Mortgage?
A low deposit mortgage is a mortgage where you buy a property with a smaller deposit than many traditional mortgage products require.
Many low deposit mortgage applicants use a 5% or 10% deposit. The rest of the property price is borrowed from the lender, subject to approval.
For example:
| Property price | 5% deposit | 10% deposit | Mortgage at 95% LTV |
|---|---|---|---|
| £200,000 | £10,000 | £20,000 | £190,000 |
| £250,000 | £12,500 | £25,000 | £237,500 |
| £300,000 | £15,000 | £30,000 | £285,000 |
| £350,000 | £17,500 | £35,000 | £332,500 |
| £400,000 | £20,000 | £40,000 | £380,000 |
A 5% deposit usually means a 95% loan-to-value mortgage. Loan-to-value, often called LTV, compares the mortgage amount with the property value.
Can You Get a Mortgage With a 5% Deposit?
Yes, some UK lenders offer mortgages with a 5% deposit. These are usually called 95% LTV mortgages.
You still need to pass lender checks. A 5% deposit does not guarantee approval. Lenders usually assess:
- Your income
- Your regular spending
- Your credit history
- Your employment type
- Your deposit source
- Your existing debts
- Your property type
- Whether repayments are affordable now and in the future
A mortgage adviser can help you understand which lenders may consider your situation before you apply.
You may also want to check mortgage affordability before viewing properties or making an offer.
10% Deposit Mortgage
A 10% deposit mortgage usually means borrowing 90% of the property value.
A 10% deposit may give you:
- More lender choice
- More product options
- Potentially lower rates than a 5% deposit mortgage
- Lower risk of negative equity
- A smaller mortgage balance
- More flexibility if property values change
However, saving the extra deposit can take time. Some buyers choose a 5% deposit mortgage because buying sooner is more important than waiting to save 10%.
5% Deposit vs 10% Deposit Mortgage
| Feature | 5% deposit mortgage | 10% deposit mortgage |
| Typical LTV | 95% LTV | 90% LTV |
| Deposit needed | Lower | Higher |
| Lender choice | More limited | Usually wider |
| Interest rates | May be higher | May be lower |
| Monthly repayments | Often higher | Often lower |
| Negative equity risk | Higher | Lower |
| Time needed to save | May be shorter | May be longer |
| Best suited to | Buyers ready to purchase with a small deposit | Buyers who can save more and want stronger options |
Neither option is automatically better. The right choice depends on affordability, property price, timescale, risk tolerance and lender criteria.
95% LTV Mortgages
A 95% loan-to-value mortgage allows you to buy a property with a 5% deposit. The lender provides the remaining 95%, subject to approval.
For example, if the property costs £250,000, a 5% deposit would be £12,500. The mortgage would cover the remaining £237,500.
This option may suit first-time buyers who have steady income but limited savings. However, rates can be higher than mortgages with larger deposits.
Lenders will usually review:
- Your income
- Your credit history
- Your monthly spending
- Your employment type
- Your deposit source
- The property value and condition
A 95% LTV mortgage can help you buy sooner. However, it may also carry a higher risk of negative equity if property values fall.
Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme supports selected 95% LTV mortgages. It is designed to help buyers with smaller deposits access mortgage products from participating lenders.
Under this type of scheme, the borrower still applies for a normal residential mortgage. The lender receives a government-backed guarantee on part of the loan.
This does not mean every buyer will be accepted. You must still meet the lender’s affordability, credit, and property criteria.
This option may be useful if you have a 5% deposit and want to buy a suitable residential property. A mortgage adviser can check which lenders are participating and whether your circumstances fit their criteria.
Shared Ownership
Shared Ownership allows you to buy a share of a property and pay rent on the remaining share. You may then be able to buy more shares later. This is known as staircasing.
Because you buy only part of the property at first, the required deposit may be lower than when buying the full home outright.
For example, if you buy a 25% share of a £300,000 property, your mortgage and deposit are based on that share, not the full property value.
Shared Ownership may suit buyers who cannot afford the deposit or mortgage payments for a full property purchase. However, you must also consider rent, service charges, lease terms, and future costs.
Family-Assisted Mortgages
Family-assisted mortgages allow relatives to support a buyer without always giving a large deposit as a gift.
Different lenders structure these products differently. A family member may place savings into a linked account, provide security against their own property, or support the application in another approved way.
This may help buyers who have a stable income but need extra support to meet lender criteria.
However, family members must understand the risks. Their savings or property may be affected if the borrower does not keep up with repayments.
Independent advice may be recommended for relatives before they agree to help.
Guarantor Mortgages
A guarantor mortgage allows another person, often a parent or close relative, to support the borrower’s application.
The guarantor agrees to cover the mortgage payments if the borrower cannot pay. This may help some buyers access a mortgage with a smaller deposit or lower income.
Not all lenders offer guarantor mortgages. Criteria can also be strict.
The guarantor assumes a significant financial obligation. Their own borrowing power, credit profile, and property may be affected.
This option should be considered carefully. Legal advice may also be required.
New-Build Low Deposit Options
Some buyers use low-deposit mortgages to buy a new-build home. Lender criteria can be different for new-build properties.
Some lenders may ask for a larger deposit on new-build flats than on houses. Others may limit the maximum loan-to-value available.
Developers may also offer incentives, such as deposit contributions or upgrades. These must be declared to the lender.
New-build buyers should check:
- The property type
- The builder or developer
- Any incentives offered
- Leasehold terms
- Service charges
- Completion timescales
- Mortgage offer expiry dates
A mortgage adviser can help you find lenders that accept your deposit size and the type of new-build property you want to buy.
A 100% mortgage allows you to buy a property without using a cash deposit. This means the lender may provide the full purchase price, subject to strict criteria.
These mortgages are not widely available. They are usually aimed at buyers who can afford monthly repayments but have not been able to save a deposit.
Some 100% mortgage products may require a strong rental payment history. Others may need family support, such as savings held in a linked account or security from a relative’s property.
This option may suit some first-time buyers. However, it carries a higher risk. If property values fall, you could owe more than the home is worth. This is known as negative equity.
Lenders will usually look closely at:
- Your income
- Your rent payment history
- Your credit conduct
- Your job stability
- Your monthly spending
- The property type
- Your future affordability
A 100% mortgage should be reviewed carefully before you apply. A mortgage adviser can explain whether this route is available, affordable, and suitable for your circumstances.
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FAQ: Low Deposit Mortgage
| Question | Answer |
|---|---|
| What is a low deposit mortgage? | A low deposit mortgage allows you to buy a property with a smaller upfront deposit. Many buyers use a 5% or 10% deposit, subject to lender criteria. |
| Can I get a mortgage with a 5% deposit? | Yes, some lenders offer 95% LTV mortgages. You must still pass affordability checks and meet the lender’s credit and property criteria. |
| Are low deposit mortgages only for first-time buyers? | No. Some home movers may also qualify. However, product availability depends on lender rules, income, credit history, and deposit size. |
| Are interest rates higher with a small deposit? | They can be. A smaller deposit means a higher loan-to-value ratio, which can increase lender risk. This may lead to higher rates. |
| Is a 10% deposit better than a 5% deposit? | A 10% deposit may give access to more lenders and better rates. However, buying sooner with 5% may still suit some buyers. |
| Can I get a low deposit mortgage with bad credit? | It may be possible, but options may be more limited. A specialist mortgage adviser can review your credit profile and lender options. |
| What is a 95% LTV mortgage? | A 95% LTV mortgage means you borrow 95% of the property value and provide a 5% deposit. |
| What schemes can help with a low deposit mortgage? | Options may include the Mortgage Guarantee Scheme, Shared Ownership, First Homes, family-assisted mortgages, and selected lender products. Eligibility rules apply. |
| Do I need a mortgage adviser for a low deposit mortgage? | You do not always need one, but advice can help. A broker can compare lenders, check criteria, and explain risks before you apply. |
Important Information
Connect Experts is a mortgage adviser directory and matching platform. We do not provide mortgage advice directly. Advice is provided by the adviser or company you choose.
We are an FCA-approved broker network and not a lender. Advisers may have access to a range of lenders. If a lender is introduced, commission may be received after completion. The commission amount may vary by lender and product, but it should not affect the amount you pay under your credit agreement.
A fee may be payable for arranging your mortgage. Your adviser will confirm the amount before you choose to proceed.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or loans secured on it.