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£5k Deposit Mortgage

Sam Hubbard talks to us about a £5k deposit mortgage.

Can I get a mortgage with a £5k deposit? How does this work?

The simple answer is yes – there is a scheme available with just a £5,000 deposit, which would have been unheard of a few years ago.

The scheme is exclusively available to First Time Buyers, and if you’re buying as a couple, at least one applicant must be a First Time Buyer. That’s defined as never having previously owned a property, and there are no background properties on the application.

If that applies, you just need £5,000 available from a deposit point of view [information correct at the time of recording in June 2025].

Can I still get a mortgage if my deposit is less than 5% of the purchase price?

Yes. Your deposit can be less than 5% of the purchase price. I’ll give a quick example – perhaps you’re buying a property for £170,000. A 5% deposit would be £8,500 and the mortgage required would be £161,500.

However, if you use the £5k deposit scheme, your deposit would be just £5,000 and the mortgage requirement would be £165,000. So, in this example, the deposit required is £3,500 less than for a typical 95% Loan to Value mortgage.

That’s a good saving – and part of the main benefit of this type of scheme, in reducing the deposit that mortgage applicants need to raise.

Who is eligible for a £5k deposit? What criteria must be met?

It is exclusively for First Time Buyers, and there’s a minimum deposit of £5,000. The maximum Loan to Value ratio is 99% of the property value. This means that the mortgage must be between £95,000 and £495,000 as a maximum.

The applicant or both applicants must have indefinite right to reside in the UK, and the maximum term of the loan is 40 years. The mortgage must finish by the time the oldest applicant is 70.

Another important piece of criteria is that the scheme is not available for new builds or flats, or properties in Northern Ireland. So, it’s available in England, Scotland and Wales, but not for new builds or flats.*

*Please note that, since the publication of this podcast and article, the £5k Deposit Scheme is now available for flats in England, Scotland and Wales.

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How does the mortgage process work?

The process is like any other First Time Buyer mortgage, in effect. The first stage is to establish the amount of loan you can achieve, where we complete the lender’s affordability calculator on your behalf.

As brokers, we collect all the necessary information and supporting documents to complete the affordability calculator accurately – so you get the correct mortgage figure. We also check that all applicants are eligible for the scheme, and that the property meets the criteria.

In reality, the process isn’t any different, but because there’s a reduced number of lenders, we have to be really accurate in working out affordability.

What if I have bad credit? Can I still get a mortgage with a £5k deposit?

There’s no precise answer to this. As part of the application process, the lender will conduct a credit check, and to be eligible for the product you will need an enhanced credit score.

So if there is bad credit in the background, the lender may not accept the application. But everyone has a different view on what is bad or good – so run it past us. We can evaluate whether there’s a chance or not.

If an applicant is not eligible for the £5k deposit scheme, but they meet the lender’s standard credit score requirements, the lender will usually say what size of loan could be achieved. So it isn’t an absolute no-no. If somebody does fail purely on credit score, the lender may offer another solution.

What are the pros and cons of getting a mortgage with a £5k deposit?

The most important benefit is that you can potentially buy a property with only £5,000 as a deposit. Not many schemes allow you to do that. You could potentially buy a property quicker and get onto the property ladder sooner.

The negative side, I would say, is that by putting less into the property, you’re going to have less equity. So you will need a solid credit score. Also, you cannot use this scheme as a home mover – it’s only for First Time Buyers.

How can a mortgage broker help? Is there anything else to add?

A broker is there to help – that’s the bottom line. With this type of scheme, especially, it’s not just about whether you fit the £5k criteria. It’s also about reviewing your situation overall, as there may be other solutions that perhaps you haven’t thought of as a First Time Buyer.

So speak to a broker and explain what you want to achieve. Even if it can’t be done right now, we’ll point you in the right direction to get yourself on the property ladder as soon as possible. We’re a sounding board, somebody who will listen and give you some guidance.

Often clients get nervous and worry that our advice will cost a lot of money, but we don’t have any upfront fees. If we can’t assist you, there’s no charge. We’re there to try and help.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

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