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The scheme is not available for new-build properties, shared ownership, or those using gifted deposits, and applicants must still meet standard affordability and credit checks.
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.”
The mortgage is available on properties valued up to £300,000, offering a maximum loan-to-value of 98 per cent and a loan-to-income ratio of 4.5 times.
It is a five-year fixed-rate product at 5.89 per cent, with a maximum term of 40 years and no product fees.
The average first-time buyer in the UK is now 32 years old, reflecting longer saving periods due to rising rents and living costs.
Nearly two-thirds of prospective buyers have already saved more than £5,000, but most believe they will need over £20,000 to purchase a home.
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