High street lender targets low-deposit borrowers with new five-year fixed rate option
Santander has introduced a new 98% loan-to-value (LTV) five-year fixed rate mortgage aimed solely at first-time buyers, further expanding high LTV choice in the mainstream market.
The My First Mortgage product is priced at 5.19% with no product fee and includes £250 cashback. Borrowers must provide a minimum £10,000 deposit, with maximum lending of £500,000 over terms ranging from five to 40 years.
Lending between 95% and 98% LTV will be limited to second-hand properties. Santander said this reflects its data showing that two thirds of its first-time buyers in 2025 purchased existing houses rather than new-build homes.
While some new buyers are still able to enter the market with substantially larger deposits – a trend highlighted in recent Moneyfacts data – higher LTV products remain a key route into homeownership for many first-time purchasers.
The product will be available through intermediaries and via Santander mortgage advisers.
“We know that saving for a deposit remains one of the biggest hurdles to homeownership. ” said David Morris, head of homes at Santander UK. “Last year, the average first-time buyer with Santander put down a deposit of more than £85,000, a figure that can feel unattainable for today’s aspiring homeowners, whether that’s a result of more modest income, limited family financial support, rising rental costs, and in some cases childcare expenses.
“We want to help more people benefit from the stability and sense of pride that owning a home brings. My First Mortgage does just that, offering the chance to speed up the time to ownership with the reassurance that the buyer has received specialist mortgage advice and will have certainty of what they are expected to pay, every month, for the next five years.”
Brokers said the move underlines growing lender appetite at the top end of the LTV spectrum, but stressed that suitability will depend on individual circumstances.
“This is an important addition from a major lender, adding to the growing ranks of mortgages designed to ease the struggles of first time buyers,” said David Hollingworth, associate director at L&C Mortgages. “There’s an increasingly healthy range of mortgages for those with little or no deposit.
“These products do carry eligibility requirements so won’t fit everyone’s requirements and a bigger deposit will still offer a wider choice with lower rates. However, the new Santander deal should help more to access homeownership sooner than they may have thought possible.”
Nicholas Mendes, mortgage technical manager at John Charcol, also highlighted both the significance of a 98% LTV offer from a high street brand and the risks associated with minimal equity.
“Santander are the latest lender to help first-time buyers with less than 5% deposit, and they are the first mainstream high street name to go beyond 95% LTV and push to 98%,” he said. “That is a big psychological shift for this part of the market, because for many renters the monthly payment has not been the issue, it has been building the deposit while rent, bills and childcare costs keep moving up.
“On the numbers, it will not suit everyone and it is not trying to. A 5.19% five-year fix with no fee, plus a valuation and cashback, gives a simple route for buyers who want payment certainty and have a smaller deposit, particularly where a gifted deposit bridges the gap. It also feels like another sign the market is steadily improving, with lender appetite at the higher LTV end widening again after a long period where options were limited.
“The main consideration is the lack of headroom. At 98% LTV, even a modest fall in property values can leave a borrower more exposed to negative equity, which can reduce flexibility when it comes to remortgaging or moving. That is why borrowers should treat it as a longer term plan, keep a buffer, and where possible use overpayments to bring the loan-to-value down towards 95% or 90% over time, which is where pricing typically gets more competitive.
“This is also where a broker adds real value. Not just in accessing the deal, but in stress testing affordability, checking the criteria, and setting a strategy for what happens at the end of the fixed rate so the borrower is not boxed in later.”
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