5% Deposit Mortgages in Scotland

Most first-time buyers will tell you that the biggest barrier to getting on the property ladder is saving up a large enough deposit. The average price of a home in Scotland is around £195,000, meaning that a 10% deposit would be almost a year’s post-tax salary if you make the median amount of £26,007.

If you only have a 5% deposit, you’ll need a mortgage with a loan-to-value (LTV) of 95%, which is considered very high. These mortgages can be difficult to find in Scotland. We’ll explain why, what your options are, and your best approach to getting one.

Can you get a mortgage in Scotland with a 5% deposit?

Yes, you can. However, it’s a little more difficult than in England, unfortunately, purely because there are fewer lenders to choose from. Only 40 mortgage providers will lend to customers buying in Scotland, compared to 74 in England.

Of those 40 lenders:

• 25 offer a 95% LTV mortgage on a standard house or bungalow
• 16 offer a 95% LTV mortgage on a standard flat or maisonette
• 7 offer a 95% LTV mortgage on a new build house or bungalow
• 1 offers a 95% LTV mortgage on a new build flat or maisonette

So, you’ll have a much better chance of getting a mortgage with a 95% LTV if you’re buying a previously owned house than you will for a newly built one, or a flat.

Your chances also depend on other factors, including:

• Your age. You’re more likely to be approved if you’re under 50.
• Your income. You’re more likely to be approved if you have a high income.
• Your debts. You’re less likely to be approved if you have a high debt-to-income ratio.
• Your employment status. You may be less likely to be approved if you’re self-employed or working on a zero-hours contract, for example.
• Your credit score. You’re less likely to be approved if you have bad credit.

How to get a mortgage in Scotland with a 5% deposit

If you want to buy a home with a low deposit, the best approach is to follow these three steps.

1. Speak to a low deposit broker

First, you need to find out, realistically, what your chances are of getting a mortgage. A broker will look at your age, income, debts, employment status, and credit score and give you their expert opinion. They might advise you to save more before you apply. If you’d like to speak to a broker, get in touch.

2. Choose a lender

Your broker can tell you which lenders might consider your application. If you’re buying a newly built property, you may only have one or two options. If you’re buying an older property, you may have several. In that case, your broker will give you a recommendation on which is the best value.

3. Carefully make your application

When your options are extremely limited, you need to be even more careful when making your application. Any mistake, for example, misstating your income or even misspelling your name or address, can result in your mortgage application being delayed or declined, and you could miss out on the home you want to buy. Your broker can help avoid this.

How much you’ll need to save

Homes in many areas of Scotland are among the cheapest in the UK. However, some areas, such as Edinburgh, are far more expensive than others. Here are the average property prices in different areas and how much you’ll need to save to put down a 5% deposit.

*According to Rightmove

Remember that you’ll also need money for other costs, such as surveys, conveyancing, and moving your possessions. For an average-priced home, these costs typically add up to around £2,000-£3,000.

Help for first-time buyers

Unfortunately, there is not currently a lot of help available for first-time buyers in Scotland. Previously available schemes, such as the mortgage guarantee scheme, the First Home Fund, the affordable new build scheme, and Help to Buy (Scotland) are all closed.

One initiative that remains is the Low-Cost Initiative for First-time buyers (LIFT).  This allows eligible buyers to buy a share in a property if they can’t afford to get a mortgage for the full value. Read more in our guide to the LIFT scheme.

Lenders who’ll consider your application

Lenders including Halifax, Santander, Scottish Widows, Barclays, and Accord Mortgages will all consider applications for 95% LTV mortgages in Scotland. Some, including HSBC, TSB, and Nationwide will consider applications for a house but not a flat or maisonette.

Bear in mind that applying directly to a lender comes with a higher risk of rejection, as you’re more likely to choose the wrong one or make a mistake with your application. To save time and frustration, it’s better to work with a broker.

Get matched with a low-deposit mortgage specialist

We offer a free broker-matching service to connect homebuyers with the broker best able to help with their application. So, if you’d like to speak to someone who specialises in 95% LTV mortgages or mortgages in Scotland, we can help.

To set up a free, no-obligation chat with a broker we’ve matched you with, just tell us a few details about your situation. You can do this by calling 0808 189 2301 or filling out this form.