Mortgage Lending updates for First-Time Buyers

Saving for a deposit has long been one of the biggest hurdles facing first-time buyers in the UK. In fact, many prospective buyers say that raising a deposit is the single biggest barrier preventing them from getting onto the property ladder.

In recent months, however, we’ve started to see some lenders introduce products designed to reduce the size of the deposit required. In some cases, buyers may now be able to purchase a property with a deposit as low as £10,000, depending on the property value and lender criteria.

While these types of products won’t suit everyone, they are an interesting development in the mortgage market and could open the door for buyers who previously felt home ownership was years away.

Why Are Lenders Offering Lower Deposit Mortgages?

The reality is that deposits have grown significantly over the last decade.

With house prices rising faster than wages in many areas, the amount needed for a traditional 10% deposit can feel out of reach, especially for those also paying rent while trying to save.

As a result, some lenders are exploring ways to help first-time buyers purchase with smaller deposits, while still maintaining responsible affordability checks.

This often means:

Borrowing up to 98% of the property value

Fixed rate products to provide payment stability

Additional affordability assessments

Restrictions on property types or borrower profiles

What Does This Mean in Real Terms?

A lower deposit requirement can significantly reduce the time it takes to buy a home.

For example:

A 10% deposit on a £300,000 property would normally require £30,000

With a 2% style deposit structure, that requirement could fall to around £10,000

For many buyers, that difference could mean getting onto the property ladder several years earlier.

Are Low Deposit Mortgages Right for Everyone?

Not necessarily. As with any financial product, there are pros and cons.

Potential advantages

• Buyers may be able to purchase sooner

• Less time spent saving while paying rent

• Opportunity to benefit from future property price growth

Things to consider

• Interest rates are usually higher with smaller deposits

• Borrowers have less equity in the property initially

• Some products may limit the type of property you can buy

This is why speaking to a mortgage adviser early can be so valuable. Often there are more options available than buyers realise, particularly when looking across the whole market.

The Importance of Advice

One of the most common misconceptions we hear is that buyers must have a 10% or even 20% deposit before they can consider purchasing.

In reality, lending criteria changes frequently and new products are introduced regularly. What may not have been possible a year ago could now be achievable.

Understanding what you could borrow, how much deposit you might need, and which lenders may suit your circumstances can make a huge difference when planning your first purchase.

If you’re currently saving for a deposit and wondering how close you might be to buying your first home, it may be worth reviewing your options sooner rather than later.

Your home may be repossessed if you do not keep up repayments on your mortgage. The information contained within was correct at time of publication but is subject to change (published 16 March 2026).