Amanda Bryden, head of mortgages at Lloyds, said: “We hear time and again from those who are doing everything right – paying their bills, managing their money well, putting aside what they can – but still feel locked out of home ownership because saving a big enough deposit seems impossible.
“The reality is that many would-be buyers are already paying as much in rent as they would on a mortgage.
“By cutting the upfront cost to £5,000 we’re breaking down a major barrier to getting on the property ladder. This gives people a better chance to own their first home and start building a more secure future.”
David Hollingworth, associate director at L&C Mortgages, is among those to welcome Lloyds’ latest mortgage offering.
He said: “We know that first-time buyers can struggle to amass a deposit big enough to make buying a reality. High rents can make it a slog to reach the minimum 5% deposit that most mortgages demand and the Bank of Mum and Dad isn’t an option for everyone.
“This new launch is significant as it marks another major high street lender developing solutions for those with a small deposit. We’ve seen a growing range of lenders in this space, designing products that could significantly speed up the journey to home ownership.
“There are now several deals where it could be possible to borrow more than 98% of the purchase price or even require no deposit at all. This will help those that have good affordability but are being held back by the need for the traditional deposit of 5% or more. On a £300k purchase price this could mean a deposit of £5k, rather than £15k.
“It won’t necessarily work for everyone and doesn’t combine with the higher lending multiples that lenders can now offer. The purchase price cap of £300k is at a level that may dent eligibility in regions where prices are highest and those able to scrape a bigger deposit together will open up cheaper rates.”
