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Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
Santander has joined a small, but growing, group of lenders offering mortgages to people with a deposit of less than 5%.
'My First Mortgage' will allow first-time buyers to buy a home with a 2% deposit, and is available at a rate of 5.19% fixed for five years, with £250 cashback and no product fees.
However, Santander's new deal comes with strict eligibility criteria on deposit size and the type of property you can buy, which means you might not be able to benefit.
Here, we explain who qualifies for Santander's new deal, how it compares, the pros and cons of taking out a low-deposit mortgage, plus whether it's worth waiting and saving a bigger deposit.
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Santander's new mortgage is available to first-time buyers, but not those who are self-employed or living in Northern Ireland.
You will need at least £10,000 saved up for your deposit to qualify, and you must borrow at least £190,001 up to a maximum of £500,000.
Santander's maximum lending on this product is 4.45x income, so you'll need to earn more than £112,000 a year to get the full £500,000.
My First Mortgage is also only available to those purchasing existing houses. First-time buyers purchasing flats or new-build houses will only be able to borrow up to 95% loan-to-value with Santander. This is because these properties are more risky for lenders, as they're less likely to increase in value.
The product can only be applied for via a Santander mortgage adviser or mortgage broker.
Here's how Santander's new deal compares to other five-year-fixed-rate mortgages that allow first-time buyers to put down a deposit of less than 5%.
| Provider | Product name | Interest rate | Product fee | Available LTV ratios | Minimum deposit |
|---|---|---|---|---|---|
| Skipton Building Society | Track Record | 5.09% | £0 | 95% to 100% | £0 |
| Santander | My First Mortgage | 5.19% | £0 | 98% | £10,000 |
| Yorkshire Building Society | £5,000 deposit mortgage | 5.35% | £0 | 95% to 99% | £5,000 |
| Accord Mortgages | £5,000 deposit mortgage | 5.58% | £0 | 95% to 99% | £5,000 |
When looking at this type of product, Skipton Building Society offers the lowest rate, at 5.09%, but Santander's new product is competitively priced.
However, Santander's minimum deposit size is bigger than that of other lenders in this market, which could mean some buyers don't qualify.
David Hollingworth, of London & Country, told Which?: 'This is an important addition from a major lender, adding to the growing ranks of mortgages designed to ease the struggles of first-time buyers.
'These products do carry eligibility requirements, so won’t fit everyone’s requirements – and a bigger deposit will still offer a wider choice with lower rates. However, the new Santander deal should help more people to access homeownership sooner than they may have thought possible.'
The size of your deposit can make a big difference to your monthly payments, as a bigger deposit usually means you can access better rates.
We've looked at what a first-time buyer purchasing a property for £250,000 at a five-year fixed-rate (the most popular product for first-time buyers) will pay with no deposit, as well as with deposits of 2%, 5% and 10%.
The table shows that a 5% deposit could save you £118 a month compared to a 2% deposit, which amounts to more than £1,400 a year.
The savings are even greater with a 10% deposit; you could save more than £250 a month compared with a 2% deposit. Over a year, that adds up to more than £3,000.
| Deposit size | Best rate | Monthly cost |
|---|---|---|
| 0% | 5.09% | £1,474.61 |
| 2% | 5.19% | £1,459.50 |
| 5% | 4.66% | £1,341.76 |
| 10% | 4.15% | £1,206.35 |
Rates collected from Moneyfacts on 3 February 2026
The advantage of going for a low-deposit mortgage is the shorter period of time needed to save up.
More than half of UK adults said they found saving money for a deposit to be the biggest barrier to buying a property, according to research by Santander. Indeed, the average first-time buyer with the bank put down a deposit of more than £85,000 last year.
But one downside to low-deposit mortgages is that monthly repayments are steeper, as rates tend to be higher on these deals.
You will also need to factor in the other costs of buying a home, such as stamp duty and conveyancing fees. So even though you save on the deposit, you'll need to have some extra savings to cover the other costs involved.
With low-deposit mortgages, there’s also a higher risk of negative equity, where you owe more than what your home is worth. This might occur if property prices fall faster than you’re able to build equity through repayments. This could make it harder to move or remortgage later on.
Nicholas Mendes, at mortgage broker John Charcol, told Which?: 'The main consideration is the lack of headroom. At 98% LTV, even a modest fall in property values can leave a borrower more exposed to negative equity, which can reduce flexibility when it comes to remortgaging or moving.
'That is why borrowers should treat it as [part of] a longer-term plan, keep a buffer, and where possible use overpayments to bring the loan-to-value down towards 95% or 90% over time – which is where pricing typically gets more competitive.'
If you're struggling to save up enough of a deposit, there are other options to explore.
A guarantor mortgage allows family or friends put up money as collateral. This can be done by family or friends putting money into a specially designed savings account or using their own home as security.
Barclays, Buckingham Building Society, Halifax, Loughborough Building Society, Tipton & Coseley Building Society and Vernon Building Society all offer a guarantor mortgage.
You may also qualify for a first-time buyer scheme, which can help boost your savings or reduce the upfront costs of getting on the property ladder.
