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 buyersMinimum 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.
