Health concerns rise as high‑LTV mortgages gain ground for first‑time buyers
Experts say 95% and even 100% mortgages are widening access to homeownership for those without large deposits, but higher costs and risk to long‑term wellbeing require careful consideration.
Rising affordability pressures are pushing more lenders to offer high loan-to-value mortgages of 95% or more, a trend that could help first-time buyers move from renting to owning. While such products can shorten the path to ownership for people without large deposits, health and financial experts caution that they come with trade-offs that extend beyond monthly payments.
Loan-to-value describes the share of a property's value financed by the mortgage. For example, a 5% deposit on a £200,000 home yields a 95% loan-to-value. The latest data from Halifax show the average first-time buyer deposit in 2024 was £61,090, with buyers typically providing 20% of the purchase price. Yet the number of lenders willing to accept deposits of 5% is growing, meaning more would-be buyers have options. No-deposit or 100% mortgages remain rare and often carry extra conditions, such as a guarantor or other security.
Malcolm Davidson, managing director of UK Moneyman, says that high-LTV mortgages have become a practical route for many, provided applicants have stable income, a clean credit history, and sensible money management. He notes that a 5% deposit can open doors for those priced out of a rising rental market, but the cost of credit is higher and borrowers start with less equity. Fully 100% mortgages exist in limited forms, and some lenders require additional features, such as fixed payments for a long term or a rent-history-based qualification. He adds that some programs allow parents to provide security or act as guarantors, but that also puts their property at risk if payments are not sustained.
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, says there has been a notable resurgence in 95% and 100% loans over the past year. The upside is clear: greater accessibility for buyers who do not have substantial deposits and want to start building equity. The downside is a higher interest rate and the potential for negative equity if property values fall. Geddes stresses that such products are not a universal solution and should be pursued with professional advice, especially for buyers with lower incomes or limited savings. She notes that alternatives, including joint ownership and shared ownership schemes, can also help bridge the gap between renting and owning but come with their own complexities.
Even with high-LTV options, many lenders base affordability on income rather than deposits alone. For buyers without family support, a broker can help tailor a plan that matches the budget and long-term goals, including how long to fix a rate and what the total cost would be over the loan term. Some lenders exclude new builds from low-deposit deals, adding another layer of consideration for first-time buyers who favor modern developments.
While high-deposit or no-deposit mortgages can accelerate access to a home, experts emphasize careful planning. Other strategies include pooling savings with a partner or friend for a joint purchase, or buying in a more affordable area to build equity over time. Shared ownership, though not without pitfalls, may offer a steppingstone to full ownership for those who can manage rent on the remaining share and the mortgage on the owned portion.
Beyond the financial calculus, housing affordability is closely tied to wellbeing. The notes point to a backdrop of rising rents and living costs that place stress on households and can affect mental and physical health. While a high-LTV mortgage may reduce the immediate burden of paying rent, the longer-term risks—higher monthly payments, greater interest costs, and the possibility of negative equity—can keep anxiety high if plans go awry. Experts caution buyers to assess not only the apparent affordability but also how a loan of this type fits into a stable long-term budget.
Ultimately, the decision to pursue a high-LTV mortgage should be made with professional guidance and a clear understanding of both financial and health implications. For readers considering this route, lenders and brokers recommend comparing deals across lenders, weighing fixed-rate terms, and testing scenarios in which interest rates rise or house values fall. Tools and broker services are available to help compare options and estimate total costs over the loan term.