A Simple Guide to 98% Mortgages for First-Time Buyers

Saving for a house deposit can feel like trying to fill a bath with the plug out especially when rent, bills and everyday life keep getting more expensive. If you’re a first-time buyer, it can sometimes feel like owning a home is always just out of reach.

The good news? Some lenders are now offering very low deposit mortgages, designed specifically to help first-time buyers get onto the property ladder sooner. One example is a new 98% mortgage, which means you could potentially buy a home with just a £10,000 deposit.

Let’s break it down in simple terms 👇

What Is a 98% Mortgage?

Put simply, a 98% mortgage lets you buy a home with a much smaller deposit than usual – just 2% of the property price (as long as you have at least £10,000 saved).

Here’s what that could look like in real life:

• Buying a £200,000 home? Your deposit could be £10,000

• Buying a £300,000 home? Your deposit could still be £10,000

• Buying a £500,000 home? Your deposit could be £10,000

This type of mortgage is designed for first-time buyers who can afford the monthly mortgage payments, but find it really hard to save a big deposit while also paying rent and everyday living costs. It’s about helping you get on the property ladder sooner, rather than waiting years to save a larger deposit.

My First Mortgage – Key Information for First-Time Buyers

One of the newest 98% mortgage products available is Santander’s My First Mortgage. Here’s a simple overview of the key criteria:

• First-time buyers only
  👉 If buying jointly, both applicants must be first-time buyers

• Minimum deposit: £10,000

• Borrowing range: £190,001 – £500,000

• Loan to Value: 95% – 98%

• Interest rate: 5.19% fixed for 5 years

• Product fee: None

• Cashback: £250

• Maximum mortgage term: 40 years

• Maximum borrowing: 4.45x income

• Property type: Houses only

• Not available for:

  • Flats

  • New build homes

  • Shared Ownership

  • Self-employed applicants

  • Properties in Northern Ireland

This won’t suit everyone, but for the right person, it could be a real opportunity to stop renting and start owning.

How Much Could I Borrow as a First-Time Buyer?

With this type of mortgage, the maximum loan is typically capped at 4.45 times your income.

For example:

• Earn £40,000? Maximum borrowing around £178,000

• Earn £50,000? Maximum borrowing around £222,500

• Joint income of £70,000? Maximum borrowing around £311,500

Your actual borrowing will depend on your full financial picture, including your credit history, existing commitments, and everyday living costs. This is where personalised advice really matters.

Is a Low Deposit Mortgage a Good Idea?

A low deposit mortgage can be a fantastic stepping stone for some first-time buyers but it’s not always the right choice for everyone.

Pros:

• Helps you buy your first home sooner

• Lower deposit needed

• Fixed rate gives payment certainty

• No product fee

Things to think about:

• Rates are usually higher with very small deposits

• Monthly payments can be higher

• Fewer mortgage options available at high loan-to-value levels

• You’ll build equity more slowly in the early years

For some people, waiting and saving a bit more deposit can open the door to cheaper rates. For others, getting on the ladder now makes sense – especially if rents are high.

Are There Other Options for First-Time Buyers with Small Deposits?

Yes – a 98% mortgage is just one of several options. Depending on your circumstances, you might also be able to explore:

• Low deposit mortgages requiring around £5,000.

• 100% mortgages, sometimes available with family support.

• Family-assisted schemes, where parents or relatives help without gifting large sums of money.

The key is understanding what’s realistic for you, not just what sounds appealing on paper.

Speak to a First-Time Buyer Mortgage Specialist

This is where we come in. At Oak and Clever Mortgages, we help first-time buyers:

✔️ Understand how much they can realistically borrow
✔️ Compare low deposit mortgage options
✔️ Check eligibility before making an offer
✔️ Avoid costly mistakes that can delay or derail a purchase

We’ll explain everything in plain English, without pressure or jargon.

Ready to See If You Could Buy Your First Home?

If you’re wondering whether you could buy with a £10,000 deposit or just want to know what your options look like – we’d love to help.

👉 Book your free first-time buyer mortgage review with Oak and Clever Mortgages today.

We’ll check your affordability, talk through deposit options, and help you build a clear plan to get you into your first home sooner than you might think.

Start your first-time buyer journey today – your future home could be closer than you think.

Important Disclaimer

• Mortgage rates, product availability and lending criteria are correct at the time of publication and are subject to change.

• This information is provided for guidance only and does not constitute personalised mortgage advice.

• Not all applicants will be eligible. All mortgages are subject to lender criteria, affordability checks and valuation.

• Your home may be repossessed if you do not keep up repayments on your mortgage.