First-time buyers can now get a mortgage with less than five percent deposit

Potential homeowners have been given a huge boost on their journey to getting on the property ladder.

There's a deposit available which requires you to put as little as two percent of the total property price down, if you can believe it.

Amidst the ongoing cost-of-living crisis, you'd probably think that I was joking, but it's available for anyone who is looking to buy their first ever home.

The news comes following advice from Martin Lewis, who has advised those saving for a house to open a Lifetime ISA (LISA) and place £1 in it, ahead of the UK government's announcement that it would be scrapping the scheme.

It is arguably one of the most popular saving schemes in place for Brits to benefit from, though a new saving product is on the way.

For those who may already have enough to put a deposit down though, there may be a quicker way to secure that house.

Buying your first home is easier said than done (Getty Stock Image)

What is the new mortgage?

Santander are offering customers a mortgage rate involving a two percent deposit under a mortgage deal, which has hit the market today (3 February), report The Times.

The lender has a 10 percent share of the mortgage market, and they have become the largest lender to offer mortgages to home buyers, which require less than a five percent deposit.

It means that someone could put down at least £10,000 and borrow up to £500,000, which applies up to a maximum of 4.45 times their salary.

This required deposit, along with the maximum loan size, means that it is essentially a 98 percent loan-to-value (LTV) at 5.19 percent, which is fixed for five years.

The deal only applies to houses and not new-build properties - there is no fee and it comes with a £250 cashback.

How does this compare to other low-percentage mortgages?

Eagle-eyed prospective buyers will have noticed that this rate is higher than those who are looking to secure a five percent deposit.

For this, the lowest is 4.47 percent on a two-year fix from the Co-op bank, with the second-lowest coming from Nationwide Building Society at 4.53 percent.

To put it into perspective, somebody with a £200,000 25-year loan would pay £1,191 per month on the Santander deal, while paying just £1,108 if they put a five percent deposit down with Co-op Bank.

Santander's new mortgage is aimed at those struggling to secure big deposits, with the lenders naming this as the biggest challenge facing homebuyers in the UK.

More similar mortgage deals were available prior to the 2008 Financial Crisis (Getty Stock Image)

How will the mortgage help Brits?

Back in November, the UK's average house price sat at £271,188, according to the UK House Price Index, meaning that a five percent deposit would be £13,559.

Santander detailed that the minimum deposit was set at £10,000 to allow buyers to secure a home while making sure that they were protected against the risk of negative equity.

This is when a property's value falls below the amount that's owed.

Brits seem to agree with the lender, as a poll by the Building Societies Association showed that 64 percent claimed that raising a deposit was the biggest barrier in the way of buying a home.

This reason was followed by not being able to borrow enough and the affordability of monthly repayments.

Mortgages at LTV's over 95 percent were more common prior to the 2008 financial crisis, when you could borrow more than a property's purchase price.

This gamble on prices continuing to rise came crashing down, though these loans have made a return in recent years.