5% Deposit Schemes For Second-Time Buyers
Find out all about the 5% deposit schemes available to second-time buyers here.
How will you be using the property?
Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Many homemovers use the equity they’ve built up in their first home for a deposit. However, this isn’t always an option, particularly if the value of your property has fallen since you bought it.
In this situation, you’d have to look elsewhere to find the funds for a deposit.
Fortunately, schemes are available to help second-time buyers with a deposit as small as 5%. This guide explains everything you need to know about these schemes, including how they work, eligibility requirements, and how a broker can help.
Read on for more information, or jump to the relevant section via the links below…
Can you get a 5% deposit mortgage as a second time buyer?
Yes, there are a number of home-buying schemes available to people who own or have previously owned a property and who only have a 5% deposit.
Here’s a rundown of what’s available:
Launched in 2021, the mortgage guarantee scheme is a government initiative to increase 95% loan-to-value (LTV) mortgages on the market. Participating lenders purchase a guarantee, which means the government will compensate them if a borrower defaults on their mortgage repayments.
The scheme is available to borrowers with a deposit of between 5% and 9%.
Additional eligibility criteria for this scheme include:
- The property you’re buying must be valued at less than £600,000.
- The property must be your primary residence. It can’t be a new build, holiday home or buy-to-let.
- The mortgage you apply for must be a repayment method from a participating lender, not interest-only.
Shared Ownership lets you buy a share of a new build property and rent the remaining share from a council or housing association. If and when you can afford it, you can buy more of your home over time, known as staircasing. The more of the property you own, the less rent you pay, and it is possible to purchase 100% of it eventually. This scheme is open to people who used to own a property but can’t afford to buy a new one, as well as first-time buyers.
Below are the criteria you must meet to qualify:
- You have a deposit of at least 5% of the value of the share you’re buying
- Your household income is less than £80,000.
- You don’t own another home.
- You’re over 18.
- The property you’re buying is a new build.
- You can’t afford to buy a similar property on the open market.
- You meet the criteria of the housing association you’re buying the property from.
- You meet the lender’s standard eligibility criteria.
Speak To An Expert In Second-Time Buyer Mortgages
Receive a Callback From a Qualified Mortgage Advisor
-
An Advisor Will Guide You Through The Entire Process
-
Receive Personalised Advice
-
Find Out How Much You Can Borrow
Is it harder to get approved with a small deposit?
Not necessarily. Suppose a lender offers low deposit mortgages – either through one of the above schemes or not – and you meet their specific eligibility and affordability criteria. In that case, there’s no reason why you shouldn’t get your application approved.
You may find that your choice of mortgage deals is more limited, as not all lenders offer low deposit mortgages. Also, you’ll find that low-deposit mortgages typically come with higher rates and fees as you’d be deemed a higher-risk borrower. Your monthly repayments will also be higher as you borrow more money.
How a broker can help with a 5% mortgage
If you’re considering using one of the above schemes to purchase a property, it’s important to seek advice from an experienced mortgage broker first.
Taking out a mortgage with a 5% deposit may help you achieve your dream of moving to a new home, but it comes with risks. Your loan won’t be cheap, and you’ll probably find yourself paying a pretty hefty interest rate. An independent broker specialising in low deposit mortgages will be able to review your circumstances and ensure you’re not overstretching yourself financially.
They can also advise on which, if any, of the 5% deposit schemes you qualify for and help you through the application process. They’ll have relationships with many of the lenders participating in the schemes and may even be able to get exclusive deals that aren’t available to the general public.
Looking for a broker who specialises in 5% deposit mortgages? Get in touch and we’ll match you to one of the experts in our network today.
We're so confident in our service, we guarantee it.
We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*
Which lenders accept a 5% deposit?
Only a handful of lenders are known to participate in the mortgage guarantee scheme; these include:
- HSBC
- Barclays
- Virgin Money
- Santander
- Natwest
- Lloyds
Only a few lenders have signed up to the deposit unlock scheme.
They are:
- Nationwide
- Accord
- Newcastle Building Society
If you opt for the Shared Ownership scheme, you’ll have a wider choice of lenders, including mainstream brands such as Nationwide, Halifax, and Barclays and specialist lenders such as Pepper Money and Accord. However, some of the high-street names reserve Shared Ownership mortgages for first-time buyers only.
Finally, remember that a minority of lenders also offer 95% LTV mortgages outside of the above schemes, and using a broker will help you access them.
Typical interest rates
As mentioned above, interest rates on 5% deposit mortgages are typically the highest to counter the potential risk involved. The table below illustrates the rates currently available.
Looking for more rates and deals?
We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.
Last updated September 2025
The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. The best way to keep track of the rates available at any given time is to speak to a mortgage broker.
Superb response and knowledgeable advisor
Steve, the financial advisor, contacted me within the hour and was very friendly, knowledgeable and professional. He seemed to relish my non standard requirement, diligently kept me updated during the day and we struck up a great relationship. Very impressed.
Peter Costello
Knowledgeable and Supportive
The team were fantastic and really knowledgeable and supportive. They answered all questions promptly and came back to me with regular updates. I have already recommended them and will use them again.
Dorothy
Prompt and Professional
A very prompt and professional service. The advise and guidance has been so valuable as a first time buyer.
Ayesha
Alternative options
If none of the schemes are suitable for you, you have other options available if you have a 5% deposit.
One option is to get a 95% LTV mortgage without using one of the schemes. Although the low deposit mortgage space is pretty limited, products are available. Accord, for example, has just re-entered the space (in January 2023), and others are expected to follow suit. A broker can advise you on whether these products are right for you.
Another option is a guarantor mortgage. This type of home loan can help people onto the property ladder who might otherwise struggle to get approved.
With this loan, a close family member – usually a parent or grandparent – agrees to step in and cover the mortgage repayments if the homeowner can’t afford to do so.
Some, though not all, of these products are available to second-time movers. Again, a broker is best placed to advise on these.
Speak to a broker who specialises in low deposit mortgages
As you can see, plenty of options are available to you if you’re a second-time buyer with a small deposit. A specialist broker is best placed to help you find the most suitable deal for your circumstances and ensure you’re paying the most competitive rate.
Our broker matching service can connect you with an expert specialising in low-deposit mortgages today.
Give us a call on 0330 818 7026 or make an enquiry and get matched with a broker for a free initial conversation.
FAQs
Yes, you can still get a small deposit mortgage if you’re self-employed. However, each lender will have its own criteria when it comes to non-standard employment, which you’ll need to satisfy to secure a loan.
Ask a quick question
We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.
Ask us a question and we'll get the best expert to help.
Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
Superb response and knowledgeable advisor
Steve, the financial advisor, contacted me within the hour and was very friendly, knowledgeable and professional. He seemed to relish my non standard requirement, diligently kept me updated during the day and we struck up a great relationship. Very impressed.
Peter Costello
Knowledgeable and Supportive
The team were fantastic and really knowledgeable and supportive. They answered all questions promptly and came back to me with regular updates. I have already recommended them and will use them again.
Dorothy
Prompt and Professional
A very prompt and professional service. The advise and guidance has been so valuable as a first time buyer.
Ayesha