The days when first-time buyers (FTBs) had limited mortgage options are now behind us. Things have improved dramatically since the early days of COVID - 95% LTV borrowing is back, a new phase of the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/help-to-buy-mortgages\/">Help to Buy scheme<\/a> began in April 2021, and the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/blog\/mortgage-guarantee-scheme-2021-everything-you-need-to-know\/">mortgage guarantee scheme<\/a> has added even more options for customers with less than 10% deposit.\r\n\r\nIn our guide to 5% deposit mortgages for first-time buyers, we go through each of these options and their alternatives in detail, and tell you how to get the right advice about them.\r\n<ul>\r\n \t<li><a href="#available">Are 5% deposit mortgages available for first-time buyers?\u00a0<\/a><\/li>\r\n \t<li><a href="#rates">5% deposit mortgage rates<\/a><\/li>\r\n \t<li><a href="#harder">Is it harder to get a 5% deposit mortgage as a first-time buyer?<\/a><\/li>\r\n \t<li><a href="#eligibility">Eligibility requirements<\/a><\/li>\r\n \t<li style="font-weight: 400;" aria-level="1"><a href="#bad-credit"><span style="font-weight: 400;">What about if you have bad credit?<\/span><\/a><\/li>\r\n \t<li style="font-weight: 400;" aria-level="1"><a href="#expert"><span style="font-weight: 400;">Speak to an expert<\/span><\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="available">Are 5% deposit mortgages available to first-time buyers?<\/h2>\r\nNot only can first-time buyers apply for the same 95% LTV and 5% deposit mortgage as everyone else, they actually have more choice in this corner of the market. This is because some of the government schemes and specialist products that can help you get onto the property ladder with only 5% deposit are exclusive to first-time buyers.\r\n\r\nThey include\u2026\r\n<ul>\r\n \t<li aria-level="1"><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/help-to-buy-mortgages\/"><b>Help to Buy equity loan scheme<\/b><\/a><b>: <\/b>This is now in phase three and is exclusive to first-time buyers, with regional property caps among the latest changes.<\/li>\r\n \t<li aria-level="1"><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/shared-ownership\/"><b>Shared Ownership<\/b><\/a><b>: <\/b>This co-ownership scheme is exclusive to first-time buyers and people who used to own a property but can no longer afford a mortgage. Deposit requirements are 5% or less, but it\u2019s possible to put down more.<\/li>\r\n \t<li aria-level="1"><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/blog\/accord-95-ltv-mortgage\/"><b>New 95% LTV mortgages<\/b><\/a><b>: <\/b>Since the mortgage market began its recovery from the effects of the coronavirus pandemic, several lenders have relaunched their 95% LTV mortgage range with products that are exclusive to first-time buyers.<\/li>\r\n \t<li aria-level="1"><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/guarantor-mortgages\/"><b>Guarantor mortgages<\/b><\/a><b>: <\/b>If you have a family member who\u2019s happy to help you out financially, it may be possible to get a guarantor mortgage with a 5% deposit made up of your own funds. Some lenders only offer these products to first-time buyers.<\/li>\r\n<\/ul>\r\nIn addition to the exclusive first-time buyer schemes and products listed above, first-time buyers can also apply for mortgages through the 2021 mortgage guarantee scheme, which is open to all customers with 5% deposit, although it\u2019s possible to put down up to 9%.\r\n<h3>95% LTV mortgage lenders for first-time home buyers<\/h3>\r\nA handful of the UK\u2019s biggest high street mortgage lenders are offering 95% LTV products under the new mortgage guarantee scheme. Since the initiative was announced, several specialist lenders have re-entered this market and are offering new 95% LTV mortgages for first-time buyers outside of the scheme.\r\n\r\nThe first mortgage lenders to reintroduce these products were broker-exclusive lenders such as Accord Mortgages. This means that some of the 95% LTV deals for first-time buyers cannot be accessed without the help of a broker, so it\u2019s worth your while speaking to one.\r\n\r\nWe could provide a comprehensive list of every lender who is offering 5% deposit mortgages for first-time buyers, but this wouldn\u2019t be especially helpful. Approaching a lender directly is not recommended since you\u2019d only have access to their products, and looking into every single mortgage provider in this category would take a lot of legwork. With this in mind, Speaking to a broker is your best bet, as this will give you access to the whole market.\r\n<h2 id="rates">5% deposit mortgage rates for first-time buyers<\/h2>\r\nYou won\u2019t necessarily pay higher interest rates on a 5% deposit mortgage purely because you\u2019re a first-time buyer, but low-deposit mortgages in general tend to come with steeper rates. For instance, most 95% loan-to-value mortgage products have an interest rate that\u2019s roughly one percentage point higher than equivalent deals with 90% LTV.\r\n\r\nBroadly speaking, 95% LTV mortgages come with the highest rates around, but there are ways that first-time buyers can boost their chances of getting onto the property ladder with 5% deposit <i>and <\/i>a favourable interest rate. Firstly, competitive rates are often available through first-time buyer schemes like Help to Buy. And secondly, a mortgage broker can help you secure the best rates by matching you with the mortgage lender who\u2019s best place to offer a table-topping deal to a first-time buyer with your needs and circumstances.\r\n\r\nBut which government scheme, if any, should you choose? Is the bonus equity a Help to Buy loan gets you worth the extra debt it comes with, and exactly what rates are on offer through these options? These are all questions that a mortgage broker can answer for you.\r\n<h2 id="harder">Is it harder to get a 5% deposit mortgage as a first-time buyer?<\/h2>\r\nIt certainly would be without government schemes and specialist mortgage products to fall back on, as the number of approachable lenders would be thin on the ground. Most mortgage providers will expect you to be able to put down at least 10%, but specialist lenders sometimes accept less than this, and through the mortgage guarantee scheme, Help to Buy and guarantor mortgages, customers with 5% deposit have possible options.\r\n\r\nAlthough getting approved through a government scheme or specialist mortgage lender can be fairly straightforward if you meet the eligibility criteria, landing the most favourable interest rates is often more difficult. It\u2019s usually the case that the rates are higher if you have less than 10% deposit to put down and the best deals can be tricky to come by.\r\n\r\nThis is why it\u2019s recommended that you speak to a mortgage broker who specialises in finding finance for customers with a low deposit. They can compare all of the deals and schemes that you qualify for and help you choose the right option first time.\r\n<h2 id="eligibility">Eligibility requirements<\/h2>\r\nMany of the schemes and products that first-time buyers can use to get a mortgage with 5% deposit have specific eligibility requirements, and they are as follows\u2026\r\n<h3>Mortgage guarantee scheme<\/h3>\r\nThe mortgage guarantee scheme isn\u2019t exclusive to first-time buyers, but the criteria they need to meet to qualify for it is the same, and you can find an overview of it below.\r\n<ul>\r\n \t<li>The property must be a primary residence<\/li>\r\n \t<li>Property must be valued at no more than \u00a3600,000<\/li>\r\n \t<li>Applicant must be an individual(s), not a company<\/li>\r\n \t<li>Mortgage must be set up on a repayment agreement, not interest only<\/li>\r\n<\/ul>\r\n<h3>Help to Buy equity loan<\/h3>\r\nThe Help to Buy scheme has now entered its third phase and is exclusive to first-time buyers. To qualify for it, you need 5% deposit and must meet the below requirements.\r\n<ul>\r\n \t<li>Must be buying a new-build property<\/li>\r\n \t<li>Property must be a primary residence<\/li>\r\n \t<li>Property must fall below the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/help-to-buy-mortgages\/#phase-three">price cap for your region<\/a><\/li>\r\n<\/ul>\r\n<h3>Shared Ownership<\/h3>\r\nThere are 95% LTV Shared Ownership mortgages available to first-time buyers as long as the criteria below applies to them.\r\n<ul>\r\n \t<li>Their household is earning \u00a380,000 or less (\u00a390K in London)<\/li>\r\n \t<li>The property must be a primary residence<\/li>\r\n \t<li>It must also be a new-build or a re-sale housing association property<\/li>\r\n<\/ul>\r\n<h3>Guarantor mortgages<\/h3>\r\nIt might be possible to get a guarantor mortgage with a 5% deposit of your own if you meet the following requirements\u2026\r\n<ul>\r\n \t<li>The guarantor must be a blood relative, such as a parent(s)<\/li>\r\n \t<li>The guarantor must agree to secure a property they own against the mortgage, or place a certain amount of savings into a special account held by the lender<\/li>\r\n \t<li>They must also agree to take responsibility for the mortgage if you\u2019re unable to<\/li>\r\n \t<li>Guarantor and borrower must both meet the lender\u2019s eligibility criteria<\/li>\r\n<\/ul>\r\nIn addition to the scheme requirements we\u2019ve covered above, you will also need to meet the mortgage lender\u2019s general criteria. If you\u2019re applying for a 95% LTV mortgage without using a government scheme, the criteria you\u2019ll have to meet as a first-time buyer will be no different to any other applicant, though the right broker might be able to match you with a mortgage lender who\u2019s more lenient with first-time buyers and offers them exclusive deals.\r\n<h2 id="bad-credit">What if you have bad credit?<\/h2>\r\nHaving bad credit isn\u2019t necessarily a deal-breaker, even if you\u2019re applying for a 95% LTV or 5% deposit mortgage as a first-time buyer. It is, however, essential that you seek professional advice before you apply, as the best rates and deals will almost certainly be difficult to come by. You\u2019ll likely need to find a specialist lender who\u2019s willing to take the age, severity and reason for your bad credit into account while assessing your application.\r\n\r\nThe right mortgage broker can help you find a lender who caters for the following and understands their unique needs\u2026\r\n<ul>\r\n \t<li>First-time buyers<\/li>\r\n \t<li>Customers with small deposits<\/li>\r\n \t<li>Customers with bad credit<\/li>\r\n<\/ul>\r\nSince your application will tick all three boxes, the chances of rejection or being lumbered with unfavourable interest rates are high, but the right mortgage broker can tip the odds in your favour. There are mortgage advisors in our network whose specialise in all of these niches, and they can help you find the right lender, first time.\r\n<h2 id="expert">Speak to an expert<\/h2>\r\nIf you\u2019re a first-time buyer who\u2019s looking for a 95% LTV or 5% deposit mortgage, speaking to a mortgage broker before you press ahead is recommended. The risk of rejection or ending up with an unfavourable deal are high if you go it alone, since some lenders see low deposits as risky and first-time buyers as a demographic to be cautious of.\r\n\r\nBut this doesn\u2019t apply to all mortgage providers. Getting a good deal with a 5% deposit is absolutely possible for first-time buyers, provided they get the right advice about which government schemes and specialist mortgage products could potentially help them.\r\n\r\nThis is where we come in. We\u2019ve made it our mission to make sure people get the right advice about mortgages and we offer a free broker-matching service that can pair you up with a handpicked expert who has the exact knowledge and experience you need.\r\n\r\nCall 0808 189 2301 or <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-specialist-broker">make an enquiry<\/a> and we\u2019ll set up a free, no-obligation chat between you and a broker who helps first-time buyers get low-deposit mortgages every day!