New £5,000 deposit mortgage launches with no ‘bank of mum and dad’ allowed
Lloyds has announced a new mortgage scheme that lets first-timers buy a house with a deposit of just £5,000 - but only if you save the money yourself.
The deal is aimed at people who don't have the luxury of the 'bank of mum and dad' and can't afford a big deposit.
So, for the average price of a house in the UK (£268,000), you would typically need a deposit of five percent (£13,400) to 20 percent (£53,600).
But through Lloyds, you can get a 98 percent loan-to-value mortgage with a fixed interest rate of 5.89 percent for five years and no product fees.
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Key features include:
- Minimum deposit of £5,000
- For those without financial support from family towards a deposit
- Available on properties worth up to £300,000
- Maximum loan to value of 98 percent
- Maximum loan to income ratio of 4.5x
- Five-year fixed rate product
- Interest rate of 5.89 percent
- Mortgage term of up to 40 years
- No product fees
- Available to both employed and self-employed applicants
However, applicants must still pass affordability and credit checks, also the mortgage is not available for new-build homes or shared ownership properties.
Example:
If you take the average first-time buyer property price in Manchester (£236,000), with a £5,000 deposit fixed for five years at an interest rate of 5.89 percent over a 35-year term, monthly repayments would be around £1,300.
It doesn't sound too bad if you compare it with an average private rent in Manchester, which is £1,347 a month.
At the end of the five-year fixed period, the homeowner could have added around a further £11,500 of equity, reducing the LTV to below 95 percent even if house prices remained flat.
"We hear time and again from those who are doing everything right – paying their bills, managing their money well, putting aside what they can – but still feel locked out of home ownership because saving a big enough deposit seems impossible," Amanda Bryden, Head of Mortgages at Lloyds, said.
"The reality is that many would-be buyers are already paying as much in rent as they would on a mortgage.
"By cutting the upfront cost to £5,000 we’re breaking down a major barrier to getting on the property ladder.
"This gives people a better chance to own their first home and start building a more secure future."
The new mortgage will open to applications from 18 May 2026, and will be available directly through Lloyds and Halifax, and via brokers.
Anish Vij