With house prices continuing to rise across the UK and the ever-increasing challenge of saving whilst paying rent, first-time buyers are facing more challenges than ever when saving for a deposit, and the prospect of homeownership could feel out of reach for many.
As mortgage brokers, we are continually looking for lending solutions to overcome no or a smaller deposit to enable our clients to make that first leap into homeownership. One such solution is Accord Mortgages ‘£5K Deposit Mortgage’ making the prospect of owning your first home more achievable.
Designed to help first-time buyers take their first step on the property ladder, this allows prospective buyers to secure a home with a deposit of £5,000, significantly easing the pressure for many to save whilst still covering rent, other household bills and day to day living expenses.
Our Mortgage Broker, Laura Mackay, is here to answer all your questions about the £5K Deposit Mortgage in our exclusive Q&A…
For those unfamiliar with the £5K Deposit Mortgage for first-time buyers, can you give a short description?
“The £5K Deposit Mortgage is an Accord Mortgages product, designed to help first-time buyers step onto the property ladder without needing to save the typical minimum 5% deposit. It’s particularly useful for those who have started saving but are not quite there yet.
“The scheme can be used to purchase a house, though it’s important to note that it doesn’t apply to flats – and at least one of the applicants must be a first-time buyer. It’s a great option for those who are ready to buy, but just need that extra bit of flexibility with the deposit.”
Why and when was the scheme first introduced?
“The £5K Deposit Mortgage was first introduced in March 2024. With other buying schemes having previously come to a halt; there hasn’t been much support for those who couldn’t quite manage to save a large deposit. Accord Mortgages have introduced a mortgage product to help.’’
How do you expect it to impact the local housing market?
“The last couple of years have been challenging for the housing market – rising interest rates and the cost of living making it much more difficult for house buyers.
“As mortgage lenders continue to develop products and solutions for buyers like this, it will hopefully increase the number of people able to realise the goal of homeownership.”
Who is eligible to purchase a property using this scheme, and are there any notable eligibility criteria that people must be aware of?
“The £5K Deposit Mortgage is exclusively for first-time buyers, as long as at least one applicant qualifies as a first-time buyer. For example, if a couple is buying together and one person has previously owned a property but has since sold it and is now renting or living with family, they would still be eligible.
“The mortgage term can extend up to 40 years, which can be beneficial for younger buyers needing lower monthly payment; however, it cannot extend past the borrower’s 70th birthday.
“Credit scoring is also slightly stricter due to the higher loan-to-value ratio, so a healthy credit record is crucial. While application success is not solely about the score, an enhanced credit score can improve approval chances.
“The scheme is currently available with a five-year fixed rate, providing borrowers with stability during the initial term. Understanding these criteria can help potential applicants prepare effectively for the application process.”
“Another key requirement is that neither applicant can own any other properties – so, if someone has a buy-to-let property, they wouldn’t qualify. Both applicants also need to have indefinite leave to remain in the UK.
“It’s important to note that the scheme is not available for new-build properties – it’s only applicable to pre-loved homes. Additionally, it doesn’t apply to properties in Northern Ireland. The minimum deposit is £5,000, and the property must be priced between £100,001 and £500,000.”
In your opinion, why do you feel the £5K Deposit Mortgage is good for first-time buyers?
“I had the privilege of having the first completion for the £5K mortgage!’’
“I think it’s a fantastic option, especially for those with limited savings who feel like they’ll never be able to afford a home of their own. Often, people manage to save a little, but life happens – whether it’s the car breaking down or unexpected expenses – and they end up in a frustrating cycle of saving and spending.
“This scheme gives people a real opportunity to break out of that cycle and get onto the property ladder.”
What are the main benefits?
“The main benefits of the £5K Deposit Mortgage are significant for first-time buyers, primarily because it allows them to become homeowners quicker due to the reduced deposit size. Transitioning from renting to owning your own property is a huge milestone, and this scheme allows first-time buyers to achieve something they’ve worked hard for and officially get their foot on the property ladder.”
How does the application process work and how can Gail Reid Mortgage Services support?
“The application process for the £5K Deposit Mortgage is very much in line with any standard mortgage application.
“The mortgage process starts with a conversation about goals and timeline for purchasing a home. We discuss the current situation and finances – income and expenditure plus savings. We calculate affordability and we agree on a budget in terms of house price and monthly mortgage payments.
“Following research, we would make a recommendation as to the best course of action, lender and mortgage product.
“Securing an agreement in principle at this point gives confidence to begin house hunting and to offer for a property.”
What advice would you give to potential clients considering applying for this scheme?
“Speak to a mortgage broker!
“Come and talk to us. At Gail Reid Mortgage Services, our consultations are free and we’re here to help. Don’t assume that you can’t or won’t be able to get a mortgage – there are lots of options available and we’re dedicated to guiding you through the entire process.”
Get in touch with the team at Gail Reid Mortgage Services to find out more about the £5k Deposit Mortgage and talk through your options.