First-time buyers only need £5,000 deposit to buy house with new mortgage

An ultra-low mortgage is entering the UK market in what is a game-changer for those struggling to get on to the property ladder.

The decision to buy your first home is a big one. But in a cost of living crisis, coming off of the back of two years of sky-high inflation and rising prices across the board, from fuel to food, it's been harder than ever to save.

Now, a brand new mortgage deal is being offered that can guarantee those who want to say goodbye to renting the chance to buy their first flat or house with a 99% mortgage.

You'll only need to put up £5,000. A big change from a market where five per cent mortgages are the norm.

To put this in simple terms, you would only need £5,000 for a house valued up to £500,000. In a 5% scheme, you would need five times that at £25,000.

Who is behind the scheme?

Yorkshire Building Society is the building society bringing the deal to the open market for those who have never owned a home.

It'll be available across England, Scotland and Wales, with the new mortgage available via brokers through Accord Mortgages; the lender’s intermediary-only arm.

For someone buying a their first property for £200,000, a £5,000 deposit would equate to 2.5% of the purchase price.

The remaining 97.5% would then be on a mortgage.

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Why is it being introduced?

Yorkshire Building Society's director of mortgages, Ben Merritt, said that their research hinted that £5,000 is the amount that could shorten the time needed for first-time buyers to get mortgage-ready.

He said it could help to encourage a 'level playing field for those who don’t have financial support from their families to fall back on'.

Under the deal, which is available to first-time buyers only, borrowers with a deposit of at least £5,000 could take out a five-year fixed-rate mortgage at 5.99%.

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Who can take advantage and what are the terms?

Anyone who has never owned a house before. There is a cap on your age at the end of the mortgage term, with it capped at 70.

The mortgage is not available for new-build properties or flats, and the society said loans are subject to rigorous credit scoring and affordability checks.

Mr Merritt said: “While £5,000 represents a 1% deposit for those who need to borrow the maximum amount available, the key is that customers are still putting money into a deposit, they still have to demonstrate strong creditworthiness and pass an affordability assessment to be eligible for a £5,000 deposit mortgage.

“We have a duty to encourage financial responsibility in anyone taking out a mortgage.”

Topics: Home, UK News, Money, News, Good News, Cost of Living

Tom Earnshaw

Tom joined LADbible in 2024, specialising in SEO and trending content. He moved to the company from Reach plc where he enjoyed spells as a content editor and senior reporter for one of the country's most-read local news brands, LancsLive. When he's not in work, Tom spends his adult life as a suffering Manchester United supporter after a childhood filled with trebles and Premier League titles. You can't have it all forever, I suppose.

@TREarnshaw