New data shows first-time buyers are splitting into two very different camps:
-
Those with large deposits, borrowing a relatively small percentage of the property’s value
-
Those with tiny deposits, using high loan-to-value (LTV) mortgages of 90–95%
We’ll explain what that actually means, why it’s happening, and what you can do if you’re trying to buy your first home.
Why are some first-time buyers sitting on big deposits?
There are a few common stories behind those sub-60% LTV buyers:
-
Bank of Mum and Dad (or Gran and Grandad)
Many buyers are getting large gifts or loans from family, sometimes from inheritance or downsizing. This can easily push deposits up into the 30–40% range. -
Long-term savers or high earners: Some people have been saving for years, perhaps living at home or renting cheaply, or they’re in higher-paid jobs that allow them to build a big lump sum.
-
Couples combining savings: Two people bringing together two ISAs, two sets of savings, maybe two families helping out can suddenly jump from a 10% deposit to something much bigger.
Having a large deposit means:
-
Access to lower interest rates
-
More choice of lenders and products
-
Often easier affordability checks, because you’re borrowing less
But this is not the reality for everyone – far from it.
Why so many still need 90–95% LTV?
For a lot of first-time buyers, scraping together even 5–10% is hard enough.
Some of the reasons:
-
High rents – It’s difficult to save when rent, bills and food costs are all high.
-
Rising house prices – Latest Halifax figures show average UK house prices now close to £300,000, hitting a record high.
-
Cost of living pressures – Inflation might be easing, but everyday costs are still eating into people’s ability to save.
So while a 5% deposit on paper doesn’t sound huge, on a typical property it still means finding well over £10,000, plus money for fees, surveys and moving costs.
High-LTV mortgages exist to bridge that gap – they let you buy with a smaller deposit. But they come with trade-offs:
-
Higher interest rates than lower-LTV deals
-
Bigger monthly payments, because you’re borrowing more
-
Greater risk if house prices fall, as you have less equity buffer
If you’re thinking about buying your first home and you’re not sure where you sit on this scale – or what’s realistic – it can really help to talk it through with a qualified adviser. They can look at your deposit, income and credit profile and help you decide whether to go ahead now, or wait and build a stronger position.