5% Deposit Mortgages

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Article created by Christian Duncan, Director – Mortgage and Protection Adviser
Last updated 23rd December 2023

Table of Contents

Can I get a mortgage with only a 5% Deposit?

Yes.  5% Deposit mortgages are available for the majority of borrowers.  Homeownership is a dream most brits hold dear, but often find difficult due to the difficulties in saving a big enough deposit to place against a property.  Thankfully, things have been made easier by lenders loosening their belts and allowing only a 5% deposit contribution.  

Is a 5% deposit a good idea?

A 5% deposit mortgage can be a fantastic way of becoming a homeowner with very little deposit but it can be risky.  If house prices were to fall slightly you could find yourself in a negative equity situation. 

Is a 10% deposit a good idea?

Having a 10% deposit would be advantageous over a 5% deposit but mortgage lenders appreciate this isn’t always possible.  You can expect to secure a slightly better rate of interest with a 10% deposit compared to a 5% mortgage deposit.   

Can I get a 100% Mortgage?

No, UK mortgage lenders require you to put forward some form of a deposit.  The deposit doesn’t always have to be your money.  On occasion you can use a gifted deposit. 

What is Loan to Value (LTV) and how does it affect Mortgages?

When you are considering a 5% deposit mortgage what you are looking for is a 95% LTV mortgage.  This may sound complex, but it is rather straightforward. The term ‘LTV’ refers to the loan amount as a percentage of the property’s value. Thus, 95 LTV mortgage deals mean the lender provides 95 percent of the property’s price, while the buyer fronts the remaining 5 percent.


5% Deposit mortgages are widespread across most lenders including lenders that look favourably towards:

  • First time buyers
  • Self Employed
  • Bad Credit Mortgage

Potential Benefits

The clear advantage is its low deposit requirement, making the homeownership dream more achievable for many.  It encourages a competitive mortgage market as 95% LTV mortgage lenders can reach out to more borrowers.

Potential Pitfalls

Remember, while borrowing more means a smaller initial outlay, it could lead to higher monthly repayments and total loan interest. Also, if your house depreciates in value, you may end up in the ‘negative equity’ trap, where you owe more than what your property is worth.  This is particularly important if you are considering moving in the coming years.  


A 95% Mortgage is a great way of achieving home ownership for many but it’s important to look at the bigger picture and plan ahead before jumping in feet first.

With the right blend of research, financial planning, and mortgage advice, first-time buyers and other eligible participants can navigate the road to homeownership with confidence.

If you have doubts about the 5% mortgage proposition and how it can affect you, here are a few points to consider:

  1. Check the interest rates: The lower deposit requirement is undoubtedly an attractive feature of this scheme. However, the interest rates on these 95% mortgages might not be as attractive. If you can, compare 95% mortgage interest rates with those of higher deposit before you make a decision.
  2. Consider the long-term implications: It’s critical to consider the consequences of a higher Loan to Value ratio. If house prices fall and you’re left in negative equity, you could end up owing more than your home is worth. This isn’t a desirable position, particularly if you need to sell or remortgage.
  3. Review your financial stability: Though this scheme is tempting because of the lower deposit, you must be sure that you can handle the monthly repayments. Discuss this with your mortgage adviser to ensure that you can meet this commitment without adversely affecting other financial responsibilities.
  4. Seek professional advice: A good mortgage adviser can help you understand the complexities of this mortgage plan and suggest alternatives suitable for your current financial situation. They can provide informed advice on remortgages at 95% LTV and help determine whether this is beneficial and cost effective for you.
  5. Prepare for extra costs: Keep in mind that buying a house involves more than just the deposit and the mortgage. There are additional costs for solicitors, stamp duties, moving expenses, etc. Budget for these additional expenses to make sure the purchase doesn’t become an overbearing financial burden.

Equipping yourself with a trustworthy mortgage adviser who has a wealth of experience in 5% mortgage deals is key.  Spend the time with your broker to fully understand the costs, implication, pro’s and con’s of such mortgage.  If you would like to book an appointment with a mortgage broker, please complete the contact request form above.

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