Lloyds Banking Group has launched a £5,000 deposit mortgage for first-time buyers.
From 18th May, first-time buyers with Lloyds, Halifax and Bank of Scotland looking at homes worth up to £300,000 may be eligible for the £5,000 deposit mortgage.
The five-year fixed rate mortgage is available at 5.89% with no product fee and an equivalent maximum LTV of 98%. The maximum LTI ix 4.5x income and the scheme is open to both employed and self-employed applicants.
The mortgage is not available for shared ownership, new build homes, or gifted deposits.
According to the most recent figures published by UK Finance, the average first-time buyer household had an income of £65,351 and bought a home worth £279,381.
Based on a 5% minimum, that means they need to save around £14,000 for a deposit, before any other cost like legal fees or furniture, fixtures and fittings.
With its new offering, Lloyds says any home with a price between £100,000 and £300,000 would have a lower deposit requirement than for a 95% mortgage.
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said: “We regularly get feedback from brokers that first-time buyers find getting a deposit together one of the main barriers to them buying a home and today we are taking another step to help them get past that.
“We recognise our responsibilities as a lender to ensure loans are affordable - not just now, but in the future for all our borrowers. With this new offer, brokers have a new option for buyers who have shown their ability to manage their finances, save for a deposit themselves and who are taking the greater certainty of a longer-term fixed rate.
“A lower deposit can make it easier to save for a deposit for many, or it can help free up cash for other costs, like conveyancing or setting up your new home the way you want it.”
