Lloyds Banking Group has launched a new mortgage aimed at helping first-time buyers get on the housing ladder and buy a house with just a £5,000 deposit.
The deal is designed for buyers who do not receive financial help from parents or family, meaning support from the “Bank of Mum and Dad” cannot be used.
It is one of the most high-profile low-deposit offers in recent years and sets strict rules on who can apply and how the deposit must be saved.
What is the £5,000 deposit mortgage offer?
The new product from Lloyds Banking Group allows eligible first-time buyers to purchase a home with a minimum £5,000 deposit. It is available on properties worth up to £300,000.
Borrowers can take out a mortgage worth up to 4.5 times their income, with a maximum loan of around £295,000. The deal is effectively a 98% loan-to-value mortgage, fixed at 5.89% for five years, with no arrangement fees.
A key condition is that applicants must have saved the £5,000 themselves. Money given or lent by parents or family cannot be used, meaning support from the Bank of Mum and Dad is excluded.
The mortgage is not available on new-build homes or shared ownership properties.
How the deal works and who can apply
Applicants must apply through Lloyds or Halifax, and will go through a standard mortgage affordability assessment, including checks on income, spending and credit history.
Borrowers must pass affordability tests showing they can manage monthly repayments at the 5.89% fixed rate over five years.
The loan is aimed at buyers who can afford repayments but have struggled to build a larger deposit due to rising house prices and living costs.
Why lenders are offering these deals
High loan-to-value mortgages have become more common again in recent years as lenders compete for first-time buyers.
These products are designed for people who can manage monthly repayments but are held back by the size of deposit required to buy a home.
While stricter lending rules were introduced after the financial crisis, lenders have gradually reintroduced 95% and 98% mortgages as part of efforts to widen access to homeownership.
Even so, they remain tightly controlled and are only offered to borrowers who meet strict affordability and credit criteria.
£5k deposit mortgage is a "positive step" for the market
The move could help more first-time buyers understand the range of mortgage options available to them, according to one leading industry figure.
Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, said: “It’s hugely encouraging to see a major high street lender making such a significant commitment to supporting first-time buyers. Unlocking up to £500m in additional lending, alongside a £5,000 deposit option, is a positive step.
"Many buyers are unaware that 5% deposit mortgages exist, while a significant number still believe they need at least 10% to buy a home. These misconceptions mean some people may be closer to buying than they think.
"Greater visibility of low deposit options will help more buyers move forward with confidence and understand the support available.”
The mortgage is now available to eligible first-time buyers looking to purchase a home with a £5,000 deposit under the new criteria.
First-time buyers interested in the deal can apply, as of 12th May (for early applications), through Lloyds Banking Group or its mortgage arm Halifax, either directly or via a mortgage adviser.
The launch marks one of the most significant low-deposit offers in recent years, but with strict limits on parental help and affordability rules still set to determine who can actually get on the property ladder.
