The UK mortgage market is experiencing a notable shift. According to Moneyfacts, the number of low-deposit mortgage products available has reached its highest level in 17 years, offering increased options for aspiring homeowners—particularly first-time buyers.
Surge in Low-Deposit Mortgage Availability
As of April 2025, there are 442 mortgage deals available at 95% loan-to-value (LTV)—meaning borrowers can access these products with just a 5% deposit. This is the highest number seen since March 2008.
Rachel Springall, Finance Expert at Moneyfactscompare, noted:
“The Government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction.”
The growing number of high-LTV products may indicate increased lender confidence and competitive dynamics in the market, as well as a response to Government encouragement to make homeownership more accessible.
What Does This Mean for First-Time Buyers?
Low-deposit mortgages—typically requiring just 5% or 10% of the property’s value as a deposit—can be particularly useful for those entering the property market for the first time.
For example, purchasing a £200,000 home with a 5% deposit would require £10,000 upfront, compared to £20,000 for a 10% deposit. This can make a significant difference for individuals who are struggling to save due to high rental costs and living expenses.
The wider availability of these products may help more people take their first step onto the property ladder. Additionally, with some fixed-rate deals available, borrowers may be able to choose repayment terms that suit their budget and offer protection against future rate rises.
Moneyfacts data also shows a small decrease in average two- and five-year fixed mortgage rates month-on-month, which could help improve overall affordability.
Important Considerations and Potential Risks
While the increased availability of low-deposit mortgages is encouraging, it’s important to weigh the risks and not assume these products are suitable for everyone.
- Higher Interest Rates
Mortgages with higher LTV ratios often come with higher interest rates. This means:
- Larger monthly repayments.
- More interest paid over the lifetime of the mortgage.
- Risk of Negative Equity
With smaller deposits, borrowers are more exposed to house price fluctuations. If property values fall, you may owe more than your home is worth—potentially making it harder to move or remortgage in the future.
- Limited Product Choice
Although availability has increased, Moneyfacts notes that only around 6% of all mortgage products currently cater to 95% LTV. This may limit options, particularly when looking to remortgage.
- Affordability Assessments
Lenders still carry out robust checks to ensure borrowers can afford repayments—even if interest rates were to rise. This means some applicants may still find it challenging to secure approval, especially if their income or expenses are stretched.
A Balanced Approach to Homeownership
The increase in low-deposit mortgage products provides greater flexibility for UK homebuyers, particularly first-time buyers. However, it’s vital to carefully assess whether these deals are right for your circumstances.
Before making any financial commitment, consider:
- Your long-term ability to manage repayments.
- The total cost over the mortgage term.
- Your resilience to market changes (e.g., rate rises or property value drops).
Seeking guidance from a qualified mortgage adviser or financial planner can help ensure that any mortgage product you consider is suitable for your needs and financial goals.
Final Thoughts
While the rise in low-deposit mortgage options is A positive development in terms of access to homeownership, it’s not A one-size-fits-all solution. Understanding the full picture—including both the opportunities and the risks—is essential. Our mortgage products can change or be withdrawn at any time and are subject to underwriting. Your home may be repossessed if you do not keep up repayments on your mortgage. Early repayment charges apply during A fixed rate period.
If you’re considering entering the property market, it’s important to review your financial position in full, explore all your mortgage options, and speak with a professional for regulated mortgage advice tailored to your circumstances.
If you have any questions or wish to explore your options, reach out to us. Our team of experts is ready to assist you. please don’t hesitate to contact us on 0333 241 3350 or email info@richmondhousewm.co.uk
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