Saving for a house deposit feels overwhelming when property prices keep climbing. But if you're a first-time buyer, you might be closer to homeownership than you think.
How does a 5 percent deposit work?
With a 5% deposit mortgage, you'll need to save just 5 percent of your property's purchase price as your upfront contribution. On a £250,000 home, that's £12,500 rather than the £25,000 you'd need for a 10% deposit. Many mainstream lenders now offer these products to both first-time buyers and home movers.
The government's Mortgage Guarantee Scheme has made these products more widely available by helping lenders offer mortgages to buyers with smaller deposits on properties worth up to £600,000. You'll typically face higher interest rates than someone with a larger deposit, but the trade-off is getting into your own home years earlier.
Can you use a gifted deposit?
Yes.
A gifted deposit mortgage allows you to use money given to you by family members or, in some cases, other close connections. While parents and grandparents are the most common sources, many lenders will also accept gifted deposits from siblings, aunts, uncles, cousins, and even friends, depending on the lender’s criteria.
You’ll usually need a signed declaration confirming the money is a genuine gift and not a loan that needs repaying, along with evidence of where the funds originated. Most lenders will allow the entire deposit to be gifted, but the rules vary significantly between providers, which is why getting advice is important. A mortgage broker can identify lenders whose criteria best match the type and amount of gifted deposit you have available.
What about zero deposit mortgages?
You might have heard about zero deposit mortgage products, and they do exist, but they're extremely limited. These schemes typically involve family members using their property as security, or builders offering incentives on new-build developments.
Be cautious here. True zero deposit products often come with significant strings attached and aren't available through standard high street lenders. What's more realistic is combining a small personal contribution with a gifted deposit to reach that crucial 5 percent threshold.
Some lenders are now offering options that allow buyers to get on the property ladder with smaller deposits than the traditional 5 percent. These products are limited and subject to strict criteria, but they can be suitable in the right circumstances. A broker can assess whether any of these lower deposit options are available to you and whether they make sense for your longer-term plans.
When should you use a first time buyer mortgage broker?
Navigating 5% deposit mortgages gets complicated quickly. Different lenders have varying criteria around gifted deposits, income multiples, and property types. That's where a mortgage broker becomes invaluable.
Why speak to us?
The team at Avalon Mortgages works with first time buyers across Hemel Hempstead, St Albans, Watford and beyond. We help you access lenders and products that are not always visible on comparison websites. In a competitive local market, experienced guidance can make a real difference to the outcome of your application.
We look at each case individually, taking the time to understand your full financial position and match you with lenders whose criteria genuinely fit how applications are being assessed right now. We also explain what borrowing at 95% loan to value means in practical terms, including longer term costs and future remortgaging considerations, so you can decide whether buying now or waiting makes the most sense for you.
Get in touch with Avalon Mortgages to discuss how a 5% deposit, or potentially even less, could help you move closer to owning your own home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
