Buying your first home is exciting, but let’s be honest—it can also feel a bit overwhelming, especially when it comes to saving for a deposit. With house prices rising and everyday costs stretching your budget, getting a mortgage with a small deposit might seem impossible. But don’t worry, there are plenty of options out there to help you take that first step onto the property ladder.
At Mortgage Bridge, we specialise in helping first-time buyers—especially those with low deposits or tricky credit situations—find the right mortgage. So, let’s dive into the best ways to buy a home without needing a huge lump sum upfront.
1. Can You Get a Mortgage with Just a 5% Deposit?
Yes! One of the most accessible ways to buy with a small deposit is through the Mortgage Guarantee Scheme. This scheme allows buyers to secure a mortgage with as little as a 5% deposit, with lenders being backed by a government guarantee. This makes banks and building societies more willing to lend to those who might otherwise struggle to get a mortgage.
Key Features:
- Only a 5% deposit needed.
- Available for properties up to a certain price limit.
- Open to first-time buyers and home movers.
- Increases the availability of low deposit mortgage options.
While this scheme is a great way to get onto the property ladder, lenders will still assess your affordability and credit history before approving your application.
2. Can Your Family Help You Get a Mortgage?
If saving for a deposit is proving difficult, you might be able to get some help from family. Family-assisted mortgages allow relatives to support you financially in a few different ways.
Ways Family Can Help:
- Guarantor Mortgages – A family member guarantees your mortgage repayments if you ever struggle to pay.
- Family Deposit Mortgages – Some lenders let family members put money into a savings account linked to your mortgage, acting as security.
- Equity Pledge Mortgages – A relative can use equity from their home to help you get a mortgage.
These options can make a huge difference, but it’s important to think through the financial and legal implications before going down this route.
3. Is Shared Ownership a Good Alternative to a Low Deposit Mortgage?
If you’re struggling with affordability, shared ownership could be a great alternative. Instead of buying a whole property, you buy a percentage (usually 25-75%) and pay rent on the rest.
Why Consider Shared Ownership?
- Smaller deposit needed (as it’s based on your share, not the full property price).
- You can increase your share over time (known as ‘staircasing’).
- It makes homeownership more achievable for those with limited savings.
That said, keep in mind that you’ll have to factor in rent and service charges, and there might be restrictions when you want to sell.
4. How Does the First Homes Scheme Work?
The First Homes Scheme is designed to help first-time buyers get onto the property ladder with a discounted home. Eligible buyers can get at least 30% off the market price, which means a lower deposit and a more affordable mortgage.
Who Can Apply?
- First-time buyers.
- People earning below a certain income threshold.
- Key workers and local residents may be prioritised.
This scheme can be a fantastic way to buy a home at a reduced cost, but it’s important to note that you’ll need to sell it at the same discounted rate in the future.
5. Which Banks Offer Low-Deposit Mortgages?
Many lenders offer 95% mortgages, which allow you to buy a home with just a 5% deposit. However, these mortgages often come with higher interest rates and stricter affordability checks.
Things to Consider:
- Interest rates are typically higher on low-deposit mortgages.
- Lenders will look at your credit history and income stability.
- Your debt-to-income ratio will play a role in whether you’re approved.
If you’re unsure which lender to go with, a mortgage broker (like us!) can help you find the best deal based on your circumstances.
6. How Can You Boost Your Chances of Getting a Low-Deposit Mortgage?
If you’re looking for a mortgage with a small deposit, there are a few things you can do to improve your chances of getting approved.
Tips to Strengthen Your Application:
- Check Your Credit Score – Lenders will assess your credit history, so improving your score can help you get better rates.
- Pay Off Outstanding Debts – The lower your debt, the more borrowing power you’ll have.
- Stable Income – Having a steady job makes you a more reliable borrower.
- Use a Mortgage Broker – A broker (like us at Mortgage Bridge) can help you find lenders that accept low deposits and tricky credit histories.
7. Are Interest Rates and Market Conditions Affecting Low-Deposit Mortgages?
The mortgage market changes all the time, and interest rates and lending criteria can fluctuate depending on economic conditions. This means that the deals available now might not be the same a few months down the line.
By staying informed and speaking to a mortgage advisor, you can make sure you’re getting the best possible mortgage deal at the right time.
Final Thoughts: What’s the Best Option for You?
There’s no one-size-fits-all answer when it comes to low-deposit mortgages. The best option for you depends on your financial situation, credit history, and whether you have family support.
At Mortgage Bridge, we’re here to help first-time buyers like you find the right mortgage—even if you have bad credit, a low deposit, or need extra guidance. Get in touch with us today, and let’s start your journey to homeownership!