If you are struggling to save a big deposit but still dream of owning your first home, you are not alone.
With house prices still high across London and the South East, many first time buyers are asking the same question: can you buy a home with a small deposit?
The good news is yes, you can!
In fact, there are several mortgage options from just a five per cent deposit that help buyers step onto the property ladder with far less savings than many expect.
In this helpful guide we explore how small deposit mortgages work, who qualifies, and which lenders are offering them in 2025.
What Is the Minimum Deposit You Need to Buy a Home?
Most mortgage lenders require a minimum deposit of five per cent of the property purchase price.
This is often called a 95 per cent loan-to-value (LTV) mortgage because you borrow 95 per cent of the home’s value and contribute the other five per cent yourself.
Example
- Property price: £300,000
- Five per cent deposit: £15,000
- Loan amount: £285,000
The lender provides the bulk of the funds and you make monthly payments on the repayment mortgage over time.
Can You Really Get a Five Per Cent Deposit Mortgage in 2025?
Yes. Several lenders continue to offer 95 per cent LTV mortgages, especially for first time buyers.
You may even qualify for better mortgage rates if your credit history is strong and your income comfortably covers the monthly repayments.
Lenders such as Skipton Building Society are actively supporting small deposit buyers through standard products and innovative new schemes, particularly if you are moving from rent into home ownership.
What Are the Pros and Cons of Buying with a Small Deposit?
Pros
- Get on the ladder sooner – no need to wait years to save a big deposit
- Start building equity – every payment helps you own more of your home
- Fix your housing costs – say goodbye to rising rent and enjoy predictable mortgage repayments
Cons
- Higher interest rates – lenders often charge more for higher LTV mortgages
- Fewer deals – there are generally fewer products at 95 per cent LTV than at lower ratios
- Slower equity growth – your ownership stake grows more slowly at first
- Greater risk – if house prices fall you could end up in negative equity
A mortgage adviser can help you weigh these pros and cons based on your income, savings, and long-term plans.
What Schemes Support Small Deposit Buyers?
Shared Ownership
Buy a portion of a new build property and pay rent on the rest. The deposit is based only on the share you buy, which keeps the upfront cost down.
Skipton Track Record Mortgage
Designed for long-term renters, this option may allow some buyers to qualify with no deposit at all, using rental payment history and affordability instead.
Joint Mortgages
Buying with a partner, family member, or friend lets you combine savings and income, lowering the loan-to-value ratio and opening more mortgage deals.
Gifted Deposits
A family gift can boost your application if it meets lender criteria and does not have to be repaid.
What Do Lenders Consider When Approving Small Deposit Mortgages?
Lenders look at several factors:
- Credit rating
- Employment status and income
- Existing debt and other financial commitments
- Affordability based on potential future mortgage repayments
- Property type and condition (some restrict lending on certain flats or ex-local authority homes)
You will usually be asked for:
- Recent bank statements
- Payslips or other proof of income
- Photo ID and proof of address
- Evidence of savings for the mortgage deposit
Use an online affordability calculator early on to find out how much you could borrow and what your monthly payments might look like.
How to Strengthen a Five Per Cent Deposit Application
Saving the minimum deposit is only part of the challenge.
Strengthening the rest of your application improves your chances of approval and may secure better mortgage rates.
Improve Your Credit Profile
Pay all credit commitments on time, keep credit card balances low, and avoid taking out new loans in the six months before you apply.
A stronger credit rating can offset some of the extra risk a lender sees in a high-LTV deal.
Reduce Unsecured Debt
Lowering credit card or personal loan balances improves your affordability score.
Lenders will stress-test your finances to ensure you could cope if interest rates rose, so clearing debt can push you over the qualifying line.
Show Consistent Savings Behaviour
Regular contributions into your deposit fund demonstrate discipline.
A clear paper trail of automated transfers helps underwriters verify the source of your deposit and shows that you can manage money responsibly.
Use an Affordability Calculator and Budget Planner
Before you submit an application, run your numbers through an affordability calculator.
Check that your monthly payments fit comfortably within your budget, leaving room for home maintenance, utilities, and council tax.
Build a Safety Buffer
Aim to keep at least three months of mortgage repayments in an easy-access savings account. T
his safety net reassures both you and the lender that you could handle a temporary income shock after completion.
Can You Remortgage with a Small Deposit Later?
If you have bought with a five per cent deposit and want to remortgage later, you may be able to access better deals as your equity grows, especially if your property value rises or you repay a sizeable chunk of the loan.
This can reduce your interest rate, lower monthly payments, and improve long-term security.
Is Buying with a Five Per Cent Deposit the Right Move for You?
It depends on your personal circumstances, savings goals, and appetite for risk.
If you have stable income, good credit, and want to stop paying rent, a small deposit mortgage could put you into your first home sooner.
If you are unsure whether to wait and save for a bigger deposit, speak to a mortgage expert.
Get Tailored Advice from The Mortgage and Protection Hub
At The Mortgage and Protection Hub we help first time buyers across London and Brighton find the right small deposit mortgage, including five per cent options, Shared Ownership, and lender specific deals for renters.
We guide you through affordability, deposit requirements, and the application process with honest advice from a team that understands the London property market.
Start Your Journey with The Mortgage and Protection Hub
With more than one hundred five-star reviews, we help first time buyers in London and Brighton step onto the property ladder with confidence, even with a small deposit.
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