High loan-to-value mortgages can be available to buyers with a 5% deposit, subject to lender criteria, affordability, credit history and the property being acceptable.
Buying with less saved
How small deposit mortgages work
Your deposit and mortgage together normally make up the purchase price of the property. If you have a smaller deposit, you need a higher loan-to-value mortgage. For example, a 5% deposit usually means borrowing around 95% of the property value.
Higher loan-to-value mortgages can help buyers reach the property market sooner, but lender choice and pricing can differ from lower-LTV borrowing. Affordability, credit history, property type and the source of the deposit still need to meet the lender’s criteria.
It is also worth separating the deposit from the rest of your buying costs. Legal work, surveys, moving expenses and other costs may need to be paid from savings, so using every available pound as the deposit can leave very little reserve after completion.
Loan-to-value matters
The smaller the deposit, the higher the percentage of the property value that needs to be funded by the mortgage.
Affordability still sets the borrowing limit
Having enough deposit does not by itself mean a lender will approve the mortgage amount you need.
Keep buying costs separate
Your deposit is not the only upfront expense, so retain room for legal fees, surveys, moving costs and unexpected property expenses.
A 95% loan-to-value mortgage means the mortgage represents 95% of the property value, leaving the buyer to provide the remaining 5% as a deposit.
Not necessarily. Some higher-LTV products may be available to other residential buyers as well, although eligibility and criteria depend on the lender and product.
Often, yes. Reducing loan-to-value can open access to additional products or pricing bands, although affordability and other lender criteria still apply.
Gifted deposits and family-assisted arrangements can sometimes help. The lender will normally want to understand where the money came from and whether the family member expects repayment or an interest in the property.
Borrowing the deposit can be problematic because the additional debt may affect affordability and some lenders will not accept certain borrowed-deposit arrangements. The source of the deposit should always be disclosed.
That depends on your circumstances. A larger deposit may improve mortgage options, but waiting also means considering future house prices, rent, savings progress and your personal timetable. Compare the practical outcomes rather than assuming one route is always better.
You may need money for legal work, searches, a survey, mortgage fees where applicable, removals, insurance and other costs associated with buying and moving into the property.
Your next step
See what a smaller deposit could support
A mortgage specialist can look at your deposit, required borrowing, affordability and property details before discussing relevant lender options.