5% Deposit Mortgage
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5% Deposit Mortgage
Oliver Potter talks to us about 5% deposits.
Can you get a mortgage with a 5% deposit?
You definitely can – it’s a popular proposition. Not every single lender offers 5% deposits for mortgages, but the large majority do. Everyone on the high street will offer 5% deposits.
This type of mortgage is also known as 95% Loan to Value – which is jargon for how much you borrow against how much the house is worth.
5% deposit mortgages are designed for First Time Buyers to get onto the property ladder. Most people don’t struggle with affordability, it’s just the deposit. Getting together 10% or more than 5% can be difficult, especially with property prices rising.
What type of property can you buy with a 5% deposit mortgage?
Essentially, any property is applicable with a 5% deposit. Obviously, it has to be mortgageable – it can’t just be a shell with no kitchen or running water.
With a slightly smaller deposit, lenders will be slightly wary of properties that are more vulnerable to price changes – like a new build flat. When the market takes a downward trend, those properties are the ones to go down first.
As a result, 95% Loan to Value or 5% deposits on new build flats can be difficult. We see this on regular flats, sometimes, and it can shrink the lender pool. But it’s always worth picking up the phone and asking us about a property you’re looking to buy. We can get a 95% mortgage, but if it’s a new build flat we might be going slightly off the high street.
What schemes are available when acquiring a mortgage with a 5% deposit?
A lot of developments offer incentive schemes where developers will give you a 5% deposit towards the house. There might be a caveat – they’ll give you 5%, but no parking space, for example. That could be helpful in a lot of situations.
There’s also something called shared ownership. On a standard purchase, you need 5% of the whole of a property. If it’s worth £100,000, that’s a £5,000 deposit. But with shared ownership, instead of buying the whole £100,000 house, you can buy 50% of it. Putting 5% of that down is obviously a lot less.
There are some other schemes, but those are the main two [information correct at the time of recording in June 2025]
Which lenders provide 5% deposit mortgages? Do all lenders offer this currently?
Not every one of the lenders on our panel offer 5% mortgages, but a large portion of them do. High street lenders that people will be aware of include Halifax, NatWest and Nationwide, and these are definitely in that 95% space.
There are specialist lenders that people probably haven’t heard of who do 95% as well. That would usually be for someone with some adverse credit or unusual circumstances. With specialists it’s worth having a chat – it can be a slightly tighter profile to fit.
Who is eligible for a 5% deposit mortgage?
They are aimed at First Time Buyers because when remortgaging, people have usually built up some equity. For a 5% mortgage in the high street space, your credit record has to be pretty good.
It doesn’t have to be perfect, though. A lot of people focus on their Experian score or TransUnion and think it needs to be 999. It’s not as strict as that. Generally, it just means not having any adverse credit on the record.
In the specialist category you can still get a 5% with adverse credit, but it’s much more personal. It’s worth picking up the phone for a chat – let’s see what you’ve got. Even if you’re slightly out of profile even for specialist lending, it’s worth knowing what you need to do to get to that position. If you don’t ask, you don’t know.
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Can I get a 5% deposit mortgage with bad credit?
It can be a little bit more of a challenge if you have a 5% deposit and adverse or bad credit, but it’s definitely not impossible. While high street lenders will set a single rate, specialist lenders usually have a tiered system.
Based on your credit situation, you could be tier one, two, three or four. With more severe adverse credit, you’ll potentially be in a higher tier and the interest rate will be priced accordingly.
Some lenders on our panel are very specialist and will take quite a lot of adverse credit, even at 5% – but that’s potentially going to be a bit more expensive. Remember, though, it’s a stopgap. A lot of people go to a specialist lender because they’ve suffered some adverse credit and in two years’ time will go straight to the high street – because by then the adverse credit is historic.
Can I remortgage with a 5% deposit?
A lot of people on the specialist side with a 5% deposit will have historic adverse credit when they need to remortgage. A CCJ or a default might now be three to five years old. That means they’re potentially eligible to go to a high street lender.
If you start off in the high street space, everyone’s offering a 5% deposit. So if you’ve got good credit and 5% equity in the property, when it’s time to remortgage – as long as your credit’s not dipped – you’ll be looking at the high street.
You can even stay with the same lender. We’ll have a chat and see what’s the most cost effective route.
How do I get a mortgage with a 5% deposit? What’s the process?
Our job is to find you the right rate, and then help you through the process. Obviously, first you need to have that 5% deposit. There are some schemes where you could potentially have less deposit, but in this episode we’re focusing on 5%.
We’ll run a credit check to check if you can get rates with certain lenders. We’ll run through the costs and what you can afford on paper – but also what you want to pay, as those can be two different things.
We’ll get a Decision in Principle, which confirms your affordability and credit worthiness in writing – it’s something estate agents want to see.
Then, you find a property. We make sure that it’s suitable, with the only real caveat being whether it’s a flat or a new build flat. That may just mean we look at some other lenders with that appetite.
Once all that’s signed off, we complete an application, have a valuation on the property, and the solicitor process begins. You sign some papers and get it completed, then you get the keys.
What else do we need to know about 5% deposit mortgages?
It’s always worth having a conversation. Be aware that there are other fees that will potentially be included. We don’t charge any broker fees, but there could be stamp duty to consider and solicitor’s costs, so just make sure you’re factoring those in.
Be mindful that with a lower deposit, we could be paying a little more in interest – not a great deal more, but that’s just something to expect, essentially. So pick up the phone, let’s have a conversation and see what we can do.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.