Low Deposit Mortgages: Your Complete Guide to Buying with Less Savings

sean13869
10 hours ago
3 min read

Saving for a deposit is one of the biggest hurdles first‑time buyers face. With UK house prices rising steadily, many wonder if they’ll ever save enough. The good news? You don’t always need a huge deposit to get on the property ladder. Thanks to government schemes and innovative mortgage products, you could buy your first home with as little as 5% down, or even less. Find our more about low deposit mortgages below.

Is 5% Enough for a Deposit?

Yes. A 5% deposit can be enough to secure a mortgage, especially with the Mortgage Guarantee Scheme now permanent in the UK.

Example: On a £270,000 home, a 5% deposit is £13,500.
The remaining £256,500 can be borrowed through a 95% mortgage.

This makes homeownership more accessible for renters and young professionals who struggle to save larger deposits.

Ready to see how much you could borrow? Use our online calculator and book a free consultation today.

Low Deposit Mortgage Options

There are several routes to homeownership with a small deposit:

Mortgage Guarantee Scheme – Encourages lenders to offer 95% mortgages by reducing their risk.
Shared Ownership – Buy 25–75% of a property and pay rent on the rest. Deposits can start from just £2,875.
Deposit Unlock – Requires only 1% deposit (minimum £5,000), available for homes up to £500,000.
Zero Deposit Mortgages – Family Springboard or Track Record mortgages let you buy without a traditional deposit, though criteria apply.

Tip: Always compare deals across lenders. Many offer 95% mortgages outside the scheme, so shopping around could save you thousands.

How Does a Low Deposit Mortgage Work?

Here’s the process step‑by‑step:

Compare deals – Decide between fixed‑rate or variable‑rate mortgages.
Decision in Principle – Lender estimates how much they’ll lend based on your income and outgoings.
Make an offer – Once accepted, submit a formal mortgage application.
Affordability checks – Lender reviews your finances, credit history, and property valuation.
Mortgage offer – If approved, you’re ready to complete your purchase.

Book online now to get your Decision in Principle faster and start house‑hunting with confidence.

Can I Get a Low Deposit Mortgage?

Most buyers can apply, but lenders will check:

Income & outgoings – Can you afford repayments now and if rates rise?
Credit history – A strong score improves approval chances.
Employment status – Stable income is usually required.

Many lenders cap borrowing at 4–5 times your annual income, subject to affordability checks.

Pros and Cons of Low Deposit Mortgages

Pros	Cons
Smaller deposit needed	Higher interest rates & fees
Get on the ladder sooner	Limited choice of lenders
Keep savings for other costs	Risk of negative equity if prices fall

Types of Low Deposit Mortgages

Fixed‑Rate Mortgages
- Interest stays the same for 2–5 years.
- Predictable payments, but higher initial rates.
- Early repayment charges apply.
Variable‑Rate Mortgages
- Rates can rise or fall with the Bank of England base rate.
- Lower starting rates, but less certainty.
- Some offer flexibility with no early repayment charges.

Real Buyers, Real Results

“We thought saving for a deposit would take years, but with a 95% mortgage we bought our first home in Colchester within months. The process was smoother than expected.” – First‑time buyer, Essex
“Shared Ownership gave us the chance to buy a home with just £3,000 down. We’re now staircasing to full ownership.” – Young couple, Chelmsford

Key Takeaways

A 5% deposit can be enough to buy your first home.
The Mortgage Guarantee Scheme makes 95% mortgages widely available.
Options like Shared Ownership and Deposit Unlock reduce barriers further.
Always compare deals, check affordability, and seek advice from a mortgage broker.