Leeds Building Society has launched a new mortgage product aimed at helping first-time buyers step onto the property ladder with a deposit as low as 2 per cent.
The "Start Mortgage" allows eligible borrowers to access loans worth up to five times their annual income. However, a minimum deposit of £5,000 is required, meaning the 2 per cent deposit option is applicable for properties valued at £250,000 or more.
The maximum loan available under the scheme is £500,000, and applicants must demonstrate a minimum income of £30,000.
The mortgage, which is subject to standard affordability assessments, can be accessed either directly through Leeds Building Society or via mortgage brokers.
Notably, the society has confirmed that self-employed individuals are welcome to apply, and gift deposits are accepted, potentially allowing family members to contribute.
The five-year product has a fixed rate of 5.65 per cent with a free standard valuation and no fee payable on completion.
Some other lenders also offer low or no deposit mortgages to help first-time buyers.
Matt Bartle, director of mortgages at Leeds Building Society, said: “Saving for a deposit remains one of the biggest hurdles for first-time buyers.
“By reducing that barrier to just 2 per cent and combining it with flexible lending criteria, we’re helping more people move closer to owning their own home.”
Rachel Springall, a finance expert at Moneyfacts, said: “The Start Mortgage is a rare 98 per cent loan-to-value deal and as applicants can borrow up to five times their income, this launch could make a meaningful difference for would-be homeowners who might otherwise remain stuck in the rental cycle.”
Fixed mortgage rates have fallen at the fastest rate since October 2024, as lenders bring back down prices which spiralled at the start of the Iran war.
The number of mortgage deal choices also continued to rise and the number of days they stayed on the market for remains at just 14 on average, as the industry grapples with fast-changing outlooks on inflation and borrowing costs.
At the end of February, the interest rate on an average two-year residential fix was 4.84 per cent, but it shot as high as 5.9 per cent by early April at the high of uncertainty around the Strait of Hormuz.
By late that month the downturn had begun, and Moneyfacts data shows fixed rates dropped for a second consecutive month in June, with the biggest monthly reductions since October 2024.
Average two-year fixes fell 0.16 per cent, while five-year fixes dropped 0.11 per cent, both back to 5.52 per cent on average.
