Lloyds £5,000 deposit mortgage: New low-deposit mortgage for first-time buyers

by Aaron Strutt

May 12 2026

Lloyds Banking Group is launching a new £5,000 deposit mortgage to help first-time buyers purchase a property with a much smaller deposit than is normally required.

The new low-deposit mortgage will be available through Lloyds, Halifax and Bank of Scotland, including via Trinity Financial's mortgage brokers. It is aimed at renters and first-time buyers who can afford monthly mortgage payments but are finding it difficult to save a large deposit while paying rent and other household bills.

The product is expected to be available from 18 May 2026 and allows eligible first-time buyers to borrow more than 95% of the property value with a minimum deposit of £5,000. Lloyds says the mortgage will be available on properties worth up to £300,000, with borrowing between £97,000 and £295,000. Borrowers will have to take a five-year fixed rate product currently priced at just below 5.90%.

This is a significant move from the UK’s biggest mortgage lenders and could make a big difference to buyers who are struggling to save a traditional 5% or 10% deposit.

How does the Lloyds £5,000 deposit mortgage work?

The Lloyds £5,000 deposit mortgage is a low-deposit first-time buyer mortgage. Instead of needing a 5% deposit, some buyers may be able to purchase with a fixed £5,000 deposit.

For example, a first-time buyer purchasing a property for £250,000 would usually need a £12,500 deposit for a standard 95% mortgage. With the Lloyds £5,000 deposit mortgage, the deposit needed could be much lower.

Why is Lloyds launching a £5,000 deposit mortgage?

Saving a deposit is one of the biggest challenges facing first-time buyers. Many renters are already paying high monthly rents, but saving tens of thousands of pounds can take years.

Lloyds says its new mortgage could help buyers get onto the property ladder sooner and reduce the time it takes to move from renting to owning. The lender has also said the product could support around £500 million of lending to first-time buyers over the next year.

For buyers without help from the Bank of Mum and Dad, this type of mortgage could be an important new option.

Key features include:

• Minimum deposit of £5,000
• For those without financial support from family towards a deposit 
• Available on properties worth up to £300,000
• Maximum loan to value of 98%
• Maximum loan to income ratio of 4.5x
• Five-year fixed rate product just below 5.9%
• Mortgage term of up to 40 years
• No product fees
• Available to both employed and self-employed applicants

Are there many other lenders offering low-deposit mortgages?

There are more low-deposit mortgages available than there were a few years ago, but options below a 5% deposit are still relatively limited. 

• Santander My First Mortgage offers a 98% loan-to-value mortgage for first-time buyers, with a minimum deposit of £10,000. Santander says borrowers can take loans between £190,001 and £500,000, although the product is not available for flats, new-build homes or properties in Northern Ireland.
• Skipton Building Society’s Track Record mortgage is another low or no-deposit option. It is aimed at renters or people who have not owned a property in the past three years, and Skipton uses the applicant’s rent payment track record to assess how much they may be able to borrow.
• Nationwide Helping Hand is slightly different. It is not a 98% or 100% mortgage, but it can help first-time buyers borrow more, with some applicants able to borrow up to six times their income. This can help buyers whose main issue is affordability rather than deposit size.
• There are also standard 95% mortgages, where buyers need a 5% deposit and borrow 95% of the property value. Lloyds and Halifax both offer 95% mortgage options for first-time buyers and home movers. Click here to read our blog highlighting many of the best first-time buyer deals.

Does it make sense to take a £5,000 deposit mortgage?

A £5,000 deposit mortgage can make sense for some first-time buyers, but it is not the right answer for everyone. The biggest benefit is that it could help buyers purchase sooner. This may be attractive if the buyer is paying expensive rent and can comfortably afford the monthly mortgage payments.

However, there are risks. Borrowing at around 98% loan-to-value means the buyer has very little equity in the property. If house prices fall, the borrower could be at risk of negative equity. This means the mortgage could be higher than the value of the home.

Low-deposit mortgages can also be more expensive than mortgages for borrowers with larger deposits. Buyers with 10%, 15% or 25% deposits usually have access to a wider range of mortgage deals and more competitive rates.

Comment from Trinity Financial

Aaron Strutt, product director at Trinity Financial, says: “Lloyds launching a £5,000 deposit mortgage is a big development for first-time buyers because it tackles one of the biggest barriers to homeownership: saving the deposit. The lender already has its First-Time Buyer Boost product offering up to 5.5 times salary mortgages.

“There are many renters who are already making substantial monthly rent payments and could afford a mortgage, but they are unable to save a large deposit quickly enough. A product like this could help some of them buy sooner.

“That said, borrowers need to be careful. Very low-deposit mortgages leave buyers with limited equity, and if property prices fall there is a greater risk of negative equity. The mortgage rate, monthly repayments, property restrictions and future remortgage options all need to be considered.

“First-time buyers should not automatically choose the mortgage with the smallest deposit requirement. They need to compare Lloyds, Halifax, Santander, Skipton, Nationwide and other lenders to see which option gives them the best overall outcome.

“This is exactly where our brokers can help. The right mortgage depends on the buyer’s income, credit profile, deposit, property type, purchase price and long-term plans.”

What are the alternatives to the Lloyds £5,000 deposit mortgage?

New research reveals a clear tipping point in aspiring homebuyer behaviour, with nearly half of renters saying they would buy immediately if monthly mortgage payments matched what they currently pay in rent.

First-time buyers may want to compare the Lloyds £5,000 deposit mortgage with:

• 95% mortgages requiring a 5% deposit
• Santander’s 98% My First Mortgage
• Skipton Track Record mortgage for renters
• Nationwide Helping Hand for higher income multiple borrowing
• Family-assisted mortgages where parents or relatives help
• Concessionary purchase mortgages where a landlord or family member sells at a discount
• Shared ownership mortgages for buyers purchasing part of a property

The cheapest or most suitable option will depend on the buyer’s income, deposit, credit score and the property they want to purchase.

Should first-time buyers wait and save a bigger deposit?

Some buyers may be better off waiting and saving a larger deposit, especially if they are close to reaching 5% or 10%.

A bigger deposit can mean:

• Lower mortgage rates
• Lower monthly payments
• More lender choice
• Less risk of negative equity
• Better remortgage options in future

However, waiting is not always the best option. If rents are high, property prices are rising, or the buyer has found the right home, a low-deposit mortgage may be worth considering.

The decision should be based on affordability, job security, savings, future plans and the cost of renting compared with buying.