Historical guide: written for the circumstances and rules of May 2025. This article forms part of our backdated information archive; it is not a live product quotation.
Saving a deposit can feel like a moving target when you are also paying rent. A mortgage with a 5% deposit may be a route worth exploring, but the deposit is only one part of the decision. For first-time buyers in Fareham, Gosport and the wider Hampshire area, the useful question is what you can afford comfortably after moving in, not just whether you can reach the minimum cash amount.
What 95% loan to value means
With a 5% deposit, the mortgage is normally 95% of the purchase price, assuming the lender's valuation supports that price. On a £240,000 home, that is a £12,000 deposit and a £228,000 loan before any added fees. With a 10% deposit the loan would be £216,000. These are simple illustrations, not quotations or local price averages. If the valuation is below your agreed price, the lender may base its calculation on the lower figure, leaving a larger cash gap for you to bridge.
A small deposit does not bypass affordability
A lender still checks earnings, household spending, credit commitments and the resilience of your budget. Childcare, car finance, maintenance and variable income can all matter. Someone with a larger deposit may still fail affordability, while someone with a smaller deposit may meet a particular lender's criteria. A mortgage in principle can help establish a starting point, but it is not a guarantee. Tell the broker about upcoming changes rather than basing the application on a budget that will stop being realistic after completion.
Why pricing and property choice can differ
Higher loan-to-value lending gives the lender less protection if a property falls in value. Rates and fees can therefore differ from products for borrowers with larger deposits, although the exact comparison depends on the products available. Some lenders also restrict high-LTV lending on certain flats, new builds or unusual construction. A standard-looking listing is not proof of eligibility. Check the particular property early, especially before paying a reservation fee or committing to legal work that may not be recoverable if the mortgage cannot proceed.
Keep money aside for the rest of the purchase
Your deposit should not use every pound you have. Allow for conveyancing, searches, a survey, moving costs, lender charges and a sensible reserve for repairs. Stamp duty is another separate calculation. In England, from 1 April 2025, qualifying first-time buyers pay no SDLT on the first £300,000 and 5% on the portion up to £500,000; if the price exceeds £500,000, that relief is unavailable. Eligibility depends on the buyers' ownership history, so ask your conveyancer to confirm the actual tax rather than using a headline allowance blindly.
Could family support change the options?
A genuine gifted deposit may help you reach a different loan-to-value band, provided the lender accepts the donor and the source can be evidenced. A gift is not the same as an informal loan that everyone plans to repay later. Family-backed products can involve savings being locked away or another person's home supporting the borrowing. Those arrangements carry risks for the family as well as the buyer and need their own assessment. They should not be presented as an easy substitute for an affordable mortgage.
Should you buy now or save a little longer?
There is no single right answer. Saving more may improve product choice and leave a stronger buffer, but continuing rent and changes in property prices also affect the comparison. Work through a realistic monthly savings figure and a timetable rather than assuming values or mortgage rates will move in your favour. Consider the risk of negative equity too: a small deposit gives less cushioning if values fall and you need to sell. A longer mortgage term can reduce the monthly payment but usually increases total interest if other factors stay the same.
Start with a purchase budget, not a promise
Bring your deposit figure, income details, regular outgoings and the type of property you are considering. We can explore what a 95% mortgage application would involve and compare it with alternatives that fit your situation. Easy Mortgages' purchase broker fee is £495 where applicable; lender and other purchase costs are separate. The goal is not to push the largest possible loan. It is to help you understand a workable route to owning a home without leaving yourself stretched from the first month.
Talk it through with Easy Mortgages
If you would like to understand how this relates to your own plans, contact Easy Mortgages for an initial conversation. We can explain the next steps and the information a personalised review would need, without assuming a particular product is right for you.
This is general information, not personal mortgage, insurance, legal or tax advice. Rules, lender criteria and products can change after May 2025. Any recommendation requires an assessment of your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured on it.
Further reading: HMRC first-time buyer relief and historical thresholds. Official guidance may subsequently be updated; the explanation above is framed for the archive date.