Lloyds Banking Group has launched a new mortgage aimed at helping first-time buyers get on the housing ladder and buy a house With just a £5,000 deposit.
The deal is designed for buyers who don’t have financial support from parents or family, meaning support from the “Bank of Mum and Dad” can’t be tapped.
It is one of the most high-profile low-deposit offers in recent years and sets strict rules on who can apply and how deposits must be saved.
What is a £5,000 deposit mortgage offer?
A new product from Lloyds Banking Group allows first-time buyers to buy a home with a minimum £5,000 deposit. It is available on properties up to £300,000.
Borrowers can take out a mortgage worth up to 4.5 times their income, with a maximum loan of around £295,000. The deal is effectively a 98% loan-to-value mortgage, fixed at 5.89% for five years, with no arrangement fees.
The main condition is that applicants must have saved £5,000 themselves. Money given or lent by parents or family cannot be used, meaning support from the Bank of Mum and Dad is excluded.
Mortgages are not available on new-build homes or shared ownership properties.
How the deal works and who can apply
Applicants must apply through Lloyds or Halifax, and will undergo a standard mortgage affordability assessment including income, expenditure and credit history checks.
Borrowers must pass affordability tests showing they can manage monthly payments at a fixed rate of 5.89% over five years.
The loan is intended for buyers who can afford the repayments but are struggling to make a large deposit due to the rising amount. house prices and living expenses.
Why Lenders Offer These Deals
Higher loan-to-value mortgages have become more common in recent years as lenders compete for first-time buyers.
These products are designed for people who can manage the monthly payments but are put off by the size of the deposit required to buy a home.
When tighter lending rules were introduced after the financial crisis, lenders have gradually reintroduced 95% and 98% mortgages as part of efforts to expand access to homeownership.
However, they remain tightly regulated and are only offered to borrowers who meet strict affordability and credit criteria.
A £5k deposit mortgage is a “positive step” for the market
According to a leading industry figure, the move could help first-time buyers understand the range of mortgage options available to them.
At Rachel Geddes, Director of Strategic Lender Relations Mortgage Advice Bureausaid: “It is very encouraging to see a major high street lender making such a significant commitment to supporting first-time buyers. Unlocking up to £500m in additional lending, with a £5,000 deposit option, is a positive step forward.
“Many buyers are unaware that a 5% deposit mortgage exists, while a significant number still believe they need at least 10% to buy a home. These misconceptions mean some people may be closer to buying than they think.
“Greater visibility of low deposit options will help more buyers move forward with confidence and understand the support available.”
Mortgages are now available to eligible first-time home buyers with a £5,000 deposit under the new criteria.
First-time buyers interested in the deal can apply through Lloyds Banking Group or its mortgage arm Halifax, directly or through a mortgage adviser, on 12 May (for early applications).
The launch is one of the most significant low-deposit offers in recent years, but strict limits on parental help and affordability rules are still set to determine who can actually get on the property ladder.
