Buying a property in the UK can feel overwhelming, especially when it comes to understanding deposits, mortgage rates, and loan-to-value ratios. One of the biggest misconceptions in the market is that you need a huge deposit to buy a home — but in reality, many lenders are still offering mortgages with deposits as low as 5%.
Here’s what buyers need to know in 2026.
How Much Deposit Do You Need to Buy a Property in the UK?
The minimum deposit required for most residential mortgages in the UK is typically 5% of the property’s value. This means if you’re buying a £250,000 property, you could potentially buy with a deposit of £12,500.
Deposit requirements usually fall into these common brackets:
- 5% deposit = 95% mortgage
- 10% deposit = 90% mortgage
- 15% deposit = 85% mortgage
- 25% deposit = 75% mortgage
Generally speaking, the larger your deposit, the better the mortgage rates available to you. This is because lenders see borrowers with larger deposits as lower risk.
However, that doesn’t mean buyers with smaller deposits are locked out of the market. In fact, the number of 95% loan-to-value mortgage products available has risen significantly over the last year, giving buyers more choice than they’ve had in years.
What Is Loan-to-Value (LTV)?
Loan-to-value, often shortened to LTV, is the percentage of the property value that you borrow from the lender.
For example:
- If you buy a £300,000 property with a £30,000 deposit, you would borrow £270,000.
- That means your mortgage is 90% of the property value.
- Your mortgage would therefore be a 90% LTV mortgage.
LTV is one of the biggest factors lenders use when pricing mortgage products.
How LTV Impacts Mortgage Rates
In simple terms, lower LTV mortgages usually come with lower interest rates.
This is because the lender takes on less risk. If house prices fall or a borrower struggles financially, there is more equity in the property to protect the lender.
Current average UK mortgage rates clearly show the difference between LTV bands:
- Average 95% LTV 2-year fixed rate: around 5.88%
- Average 90% LTV 2-year fixed rate: around 5.40%
- Average 75% LTV 2-year fixed rate: around 5.04%
- Average 60% LTV 2-year fixed rate: around 4.67%
While the gap between rates may not seem huge at first glance, even a 0.5% difference can add thousands of pounds in interest over the course of a mortgage term.
That’s why some buyers choose to save for longer to secure a bigger deposit. However, others decide getting onto the property ladder sooner is more important than waiting years to save an additional 5% or 10%.
What Are Current Rates for a 95% Mortgage?
As of May 2026, the average rates for 95% loan-to-value mortgages are approximately:
- 5.88% for a 2-year fixed rate
- 5.78% for a 5-year fixed rate
Some of the best deals on the market are slightly lower than the averages. Recent 95% mortgage products have been available from around 5.25% to 5.40%, depending on fees, lender criteria, and borrower circumstances.
Mortgage pricing changes regularly based on swap rates, inflation expectations, and Bank of England policy, so rates can move quickly.
5% Deposit Mortgages Aren’t Just for First-Time Buyers
One of the most common myths in the mortgage market is that 5% deposit mortgages are only available to first-time buyers.
That’s simply not true.
While many lenders actively market low-deposit products to first-time buyers, 95% mortgages can also be available to:
- Home movers
- Previous homeowners
- People relocating
- Buyers with growing families
- Borrowers returning to the market after renting
Eligibility depends more on affordability, credit history, income, and the property type than whether you’ve owned a home before.
This is good news for existing homeowners who may have limited equity but still want or need to move.
Choose a Reputable Mortgage when buying a property with a smaller deposit
The UK mortgage market has become far more flexible for buyers with smaller deposits. While larger deposits still unlock better rates, 5% deposit mortgages remain a realistic option for many people in 2026.
Understanding loan-to-value is crucial because it directly impacts the rates available to you and your monthly repayments. Even small improvements in LTV can make a noticeable difference to mortgage costs.
Most importantly, buyers should remember that low-deposit mortgages are not reserved exclusively for first-time buyers. Whether you’re buying your first home or moving to your next one, there may be more options available than you think.
Jones & Young are whole of market mortgage brokers working with individuals, families and businesses to secure the mortgage they need to buy their next property. Contact our reliable team on 01730 776076 today or email enquiries@jonesandyoung.co.uk
