YBS launches £5,000 deposit mortgage up to 99% LTV

Yorkshire Building Society has launched a new mortgage enabling first-time buyers with a £5,000 deposit to purchase a property valued up to £500,000.

The new mortgage is available via brokers through Accord Mortgages, the lender’s intermediary arm.

For someone taking out the typical £200,000 first-time buyer mortgage, this would mean a loan-to-value of 97.5%.

The five-year fixed rate of 5.99% is available to first-time buyers only on a maximum property value of £500,000.

The product is available on a capital and interest basis only on residential house purchases, with a maximum age of 70 at the end of the mortgage term.

Director of mortgages, Ben Merritt, said: “Our analysis showed a deposit of £5,000 – compared to a typical 5% – would make a huge difference to first-time buyers across the country by reducing the time it takes them to save up and achieve homeownership, from a maximum of 7.5 years (in London), to around 2.5 years.

“While £5,000 represents a 1% deposit for those who need to borrow the maximum amount available, the key is that customers are still putting money into a deposit, they still have to demonstrate strong creditworthiness and pass an affordability assessment to be eligible for a £5k Deposit Mortgage. We have a duty to encourage financial responsibility in anyone taking out a mortgage.

“It creates a level playing field for those who don’t have financial support from their families to fall back on, after research for our recently-published Home Truths report showed that 38% of first-time buyers now receive financial help from friends and family to have the chance of stepping onto the housing ladder.

“The Society’s research among 500 first-time buyers for its Home Truths report, published in September 2023, showed that 78% of people in this category feel homeownership is becoming an elite privilege, while 63% believe the UK is in danger of becoming a nation of renters. This is a situation we believe can’t be allowed to continue.

“In our report, we’ve recommended that the Government re-introduce some form of state support for first-time buyers, and an industry-wide review involving lenders, trade bodies and the Government, is needed to start to fix what’s broken in the UK housing market.

“However, for now, we hope this £5k Deposit Mortgage will help first-time buyers overcome the deposit barrier as we believe this group deserve a chance of homeownership, because they are a vital part of a vibrant housing market.”