The major banks have launched their government-backed 95% mortgages. As such, people across the UK can now purchase a home with only 5% deposits.

The Mortgage Guarantee scheme was launched last week, intended to return mortgage opportunities for buyers with a 5% deposit.

The government has backed the scheme, acting as an insurance policy to lenders offering 95% loans. This protects them against the uncertainty of house prices declining. As a result, mortgage lenders have the confidence to lend to buyers with just a 5% deposit.

Where Can I Find A 95% Mortgage?

The major banks have already begun offering their new 95% loan-to-value product, including Lloyds, NatWest, Barclays, Santander and HSBC.

5% deposit mortgages are back 

The government-backed mortgage scheme has renewed confidence in lenders across the country. As a result, a number of lenders who are not using the guarantee scheme have also launched new mortgage products for buyers with a 5% deposit.

Lloyds, NatWest, Barclays, Santander and HSBC are taking part in the government scheme.

Although they are not taking part in the government scheme, they return to offering mortgages for those with a 5% deposit like they did pre-pandemic.

Accord Mortgages, Bank of Ireland, Skipton Building Society, Coventry Building Society, Aldermore Bank, and Buckinghamshire Building Society have already returned to 95% loans. Additionally, Leeds Building Society, Metro Bank, Atom Bank and The Cambridge Building Society have uncovered products.


Who benefits from 95% mortgages?

The new mortgage scheme could help many buyers who haven’t been able to purchase a property with a 5% deposit. The new system widens the options for buyers who may have had only the Help to Buy equity loan scheme as an option, available only for new-build properties. This could also be a favourable opportunity for buyers who would put down a 10% deposit but can now choose to keep more money saved for any refurbishments the property needs or other costs. 

Restricted Criteria For Borrowers

Lenders offering new 5% deposit mortgage products have approached with caution, adding restricted criteria for borrowers. Some lenders are also currently only providing 95% mortgages via intermediaries.

The criteria include reduced maximum borrowing and tighter credit score requirements. The interest rates are also higher than the current 10% deposit mortgages.

Other limitations may include:

  • First-time buyers only
  • Lending only on houses, not flats or new builds
  • Capping at 4.49 times your income 
  • Five-year fixed rates only


Will this make homeownership affordable?

If you are a single buyer, the 5% deposit scheme may not be enough to help you purchase your first property. Analysis shows that homeownership remains unaffordable for many despite the 95% mortgage products.



Analysis: Single buyers in their thirties will still struggle to get on the property ladder under the new scheme. 

Property analysis found that single people in their thirties, earning the average UK salary, will still be unable to buy a home in around half of all local authorities in England and Wales.

For example, a single woman aged 30 to 39 earns the average UK salary of £30,258. She would not afford a median-priced home from the cheapest band in more than half of local authority areas, even with a 95% mortgage. A single man in this demographic earns an average of £34,567 and would not afford a mortgage in 48% of local authorities in the UK.