Lloyds Banking Group says many renters are already paying monthly housing costs similar to mortgage repayments – but are finding it impossible to save large deposits.
The product will officially launch on May 18 and will also be available through Halifax and mortgage brokers across the UK.
First-time buyers can purchase homes worth up to £300,000
Under the scheme, buyers can secure a mortgage on homes valued at up to £300,000 with a deposit starting from £5,000.
The mortgage offers:
- A maximum loan-to-value (LTV) ratio of just over 98%
- Borrowing of up to 4.5 times salary
- A five-year fixed rate of 5.89%
- No product fee
- Mortgage terms of up to 40 years
The deal is available to employed and self-employed applicants across the UK, subject to affordability and credit checks.
Lloyds says renters already pay similar amounts to mortgage costs
Lloyds said the gap between rental payments and mortgage repayments has narrowed significantly in recent years.
The bank believes many renters are already paying monthly amounts similar to what they would spend on a mortgage but remain unable to save large deposits due to rising living costs and expensive rents.
Amanda Bryden, head of mortgages at Lloyds, said many aspiring homeowners feel “locked out” of the housing market despite managing their finances responsibly.
She said lowering the upfront deposit requirement could cut years off the time needed to save for a home.
Average first-time buyer age continues to rise
According to Lloyds, the average age of a first-time buyer in the UK is now 32 — two years older than a decade ago.
The lender said higher rents and increased household bills have made it harder for younger buyers to build savings.
The launch comes amid growing pressure on lenders and policymakers to improve access to home ownership for younger generations.
Who is eligible for the new Lloyds £5k deposit mortgage?
The mortgage is available nationwide but excludes:
- Shared ownership purchases
- New-build homes
- Buyers using gifted deposits
Applicants must also pass strict affordability and credit checks.
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Other banks are also launching low-deposit mortgage deals
Several lenders have recently introduced low or no-deposit mortgages aimed at helping first-time buyers onto the property ladder.
Earlier this year, Santander UK launched a mortgage requiring a minimum £10,000 deposit.
Skipton Building Society also offers low-deposit and zero-deposit mortgage options.
