Lloyds to give first-time buyers a lifeline with new £5,000 deposit mortgage
Lloyds, one of the UK’s leading lenders, is introducing a new low-deposit mortgage system that aims to make the path to homeownership significantly easier for first-time homebuyers, requiring a deposit of just £5,000.
The product, available through Lloyds, Halifax and independent brokers, is designed specifically for renters who often cover significant monthly housing costs but are unable to get financial help from the “mum and dad bank”.
The bank emphasized that the financial disparity between typical rent payments and mortgage installments has decreased; This suggests that many renters are already paying amounts comparable to what they would pay for a mortgage.
Lloyds predicts that by significantly reducing the initial upfront cost, this new offering could shave years off the time some buyers spend saving for a deposit.
The mortgage is available for properties valued up to £300,000 and has a maximum loan-to-value (LTV) ratio of just over 98 per cent.
With a five-year, fixed-interest housing loan agreement with no product fees, people can get a loan of up to four and a half times their salary.
The mortgage product will have an interest rate of 5.89 percent when it is officially launched on May 18.
The deal is open to both employed and self-employed applicants, who must pass “strict” affordability and credit checks, according to the bank.
The loan term is up to 40 years and the product will be available across the UK.
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Get a free partial share of up to £100.
Capital is at risk.
Terms and conditions apply.
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Shared ownership schemes, new build homes and borrowers purchasing with gift deposits are not eligible.
Amanda Bryden, head of mortgages at Lloyds, said: “We hear over and over that there are people who are doing everything right – paying their bills, managing their money well, putting away what they can – but still feel left out of homeownership because it seems impossible to save a large enough deposit.
“The reality is that many potential buyers are already paying enough rent to cover their mortgage.
“By reducing the up-front cost to £5,000, we are breaking down a major barrier to getting on the property ladder. This gives people the chance to own their first home and start building a more secure future.”
The average first-time shopper is 32, two years older than a decade ago, as rising rent costs and increases in the cost of living make it harder to save, Lloyds said.
Many other lenders offer low-deposit or no-deposit mortgages, helping first-time buyers get a step onto the property ladder.
In February, Santander UK launched a mortgage requiring a minimum deposit of £10,000.
Skipton Building Society also offers low or no deposit mortgage options.
