Mortgages with a 2% or £5,000 deposit in the UK (98% LTV) – 2026 guide

Can you buy a home in the UK with a £5,000 deposit?

Yes. In 2026 several lenders – both major banks and building societies – offer mortgages with a 2% deposit (98% LTV, or loan to value) or a minimum deposit of £5,000. Some deals go up to 99% LTV. They're designed for people who can afford the monthly payments but find it hard to save the usual 5% or 10% of the price.

For example, on a £250,000 home a 5% deposit is £12,500. With a 98% LTV mortgage £5,000 is enough and you borrow £245,000 – that's £7,500 less to save.

If you have no deposit at all, read our guide to no deposit mortgages in the UK (100% LTV).

What are the typical criteria for a 98% LTV mortgage?

Every lender has its own criteria, and they can change every few weeks. Here is a summary of what we see most often.

As at October 2026. We always check current criteria and rates before applying.

Can the deposit come from family?

It depends on the lender. Some £5,000 deposit deals are designed for people who have saved on their own without family support, so the deposit must come from your own savings. Other lenders accept a gift from close family with a gift letter and proof of where the money came from. If your family can help, it's worth checking whether their support could get you a better deal with a 5% or 10% deposit.

Do 98% mortgages cover flats and new builds?

Often not. Most 98% LTV deals are for existing houses. New builds are usually excluded because their value is more likely to fall below the purchase price in the first few years. Only some lenders accept flats, and some cap them at 95% LTV. A few deals do allow new-build houses, so it's worth checking the criteria before you make an offer.

How much does a 2% deposit mortgage cost?

Rates at 98% LTV are usually higher than at 95%, and higher still compared with 90% or 85% LTV. On a mortgage of around £250,000 the difference can be tens of pounds a month. That's why we always compare two routes: buying now with a 2% deposit, or saving a few thousand more for a cheaper 95% mortgage. Sometimes buying now works out better, because the rent you pay while saving outweighs the difference in payments.

Many 98% deals come with a 5-year fixed rate. That gives you predictable payments, but repaying or switching during that period usually means an early repayment charge (ERC). Most lenders let you overpay up to 10% a year without a charge.

Negative equity – the main risk of a small deposit

With a 2% deposit, even a small fall in prices can leave your home worth less than your mortgage. For example: you buy a £250,000 home with a £245,000 mortgage. If its value falls 4% to £240,000 and you've only repaid part of the capital, you could owe more than the home is worth.

As long as you live in the home and keep up the payments, negative equity doesn't have to be a problem. It becomes one if you need to sell or want to remortgage at the end of the fixed rate – at a high LTV you'll have fewer deals to choose from. Overpayments and repaying capital over time reduce this risk.

Who is a £5,000 deposit mortgage right for?

• People with a stable income who have paid high rent for years and can't save 5–10% of the price.
• Those planning to stay in the home for at least several years.
• People with a clean credit record and few other commitments.

It makes less sense if you may move within 2–3 years, have an uncertain income or already struggle to balance your monthly budget.

What costs will you pay on top of the deposit?

• Solicitor (conveyancing) and search fees.
• A survey – recommended, especially for older homes.
• Stamp Duty – in England and Northern Ireland first-time buyers pay none on the first £300,000 if the home costs up to £500,000. Scotland (LBTT) and Wales (LTT) have different rules. Check current thresholds on gov.uk.
• Broker fees – at Balltica Consulting: £250 for a DIP and £250 for a Mortgage Offer. See our process and fees.
• Buildings insurance from exchange of contracts, and moving costs.

How to prepare for a 2% deposit mortgage

1. Check your credit report (Experian, Equifax, TransUnion) and correct any errors. You can see data from several agencies in one report with checkmyfile (affiliate link). It's a paid service after the trial period, so cancel the subscription if you no longer need it.
2. Keep your deposit in your own account and keep statements showing where the money came from.
3. If you're eligible, register on the electoral roll at your current address.
4. Avoid new loans, credit cards or car finance before you apply, and don't miss any payments.
5. Before you start viewing, check with a broker which property types and prices fit the criteria.
6. Speak to a broker. At Balltica we check your documents before applying for a Decision in Principle, so there are no surprises later.

How we can help

As a whole of market broker, we check which lender will accept your deposit, income and chosen property before you apply. We'll compare a 98% mortgage with a 95% one and with family-assisted options, and show you what each costs over the whole term. The initial review and meeting are free – book a call.