Millions of First-Time Buyers Have No Excuse — The Number You Think You Need Is Wrong

Added: 2026-05-25

[00:00:00]So there are currently 537 5% deposit mortgages available across the UK landscape right now if you're a first-time buyer. And that is double the 274 that we had available in February of 2024. So if the data and the number of these mortgages available are anything to go by, it's telling us that we're heading into a completely different kind of direction when it comes to how mortgages are going to be served up from here on out. When you think about the providers, they're pretty much all at it. Barclays, Halifax, HSBC, Lloyds, NatWest, Nationwide, Santander, several of the building societies that are they operating right now have a low deposit 5% mortgage available to first-time buyers. And I think this is worth a conversation on this podcast because we have seen since 2021 50,000 of these mortgages be completed and a lot of them actually 86% of them were taken by first-time buyers and a median property value of 208,000 pounds and that's well below the national average of 292. So these things are publicly available, they are quite popular if you look at the data. And I think like I've said, it's going to signal a completely different way in which we're going to be serving up mortgages moving forward first-time buyers. Now first-time buyer finds themselves in a really unique situation right because the truth is over the past decade or so, we have definitely seen house prices absolutely soar. We haven't seen wages kind of keep up with that.

[00:01:38]And what that means is that because house prices have become just wholly unattainable and unsustainable in terms of where they're going versus wages, the deposit was the main issue, was the main challenge for people. And these 5% deposit mortgages are designed to kind of solve that problem. Now, for those of you who are perhaps long in the tooth, you've been around for a while, you'll look back to 2007, 2008, the financial crash there, because that was based on deposits and mortgages just like these, where you could get a mortgage, there was no verification, so to speak, and that plunged the global economy into an issue. The good news is, as we fast forward to 2026, there was a lot more uh regulation around the capital reserves that banks and lenders need to have to support their mortgage book. So, I don't think there is a risk of 2007, 2008 going, but there are definitely other risks to the lender, what to the borrower, which is you listening to this if you're a first-time buyer. And I want to talk about those because I think it's really, really important. And the first thing to know is this, right? At the end of the day, the chips are stacked in the favor of a house.

[00:02:56]The house in this instance being the people who are going to be lending you money.

[00:03:03]So, the lenders, the banks, the building societies. The The chips are stacked in their favor.

[00:03:09]They basically uh dictate what the terms are. You, as a borrower, will have to agree to those terms if you want to be able to use their funds to purchase property. And if you're just like a normal person where a 5% 5% deposit might be a bit of a stretch, there is not much bargaining or negotiations to be had.

[00:03:34]And whilst that might scare a lot of people, and I think it should because you've got to go into these things with your eyes open, I do think it's really, really just to have everything out there. And the first thing that I really, really want to highlight is the fact that you have to understand how this works from a lender's point of view and how it works from your point of view as a borrower.

[00:03:58]And the key thing to note here is if you're going into a 5% deposit mortgage, there is a premium that you are going to pay.

[00:04:07]And that premium is going to be on rates. So, as a first-time buyer using a 5% deposit mortgage, you should expect to pay around 1 to 1 and 1/2% more than the best rates at a 60% loan-to-value.

[00:04:23]1 to 1 and 1/2%. Now, on the surface of things, you say 1 to 1 and 1/2%. That number in itself might sound small.

[00:04:33]But when you apply that to a mortgage, it's very expensive indeed. Because at the end of the day, you're going to pay for that by the interest on the mortgage, which on the lender's side is their reward for taking the higher risk. So, but again, understanding, you've got two parties here. You are the borrower, you've got the lender. The lender sets the terms. And because the lender will see you as a higher risk proposition because you only have a 5% deposit versus someone who can provide a 10, maybe 15, or even a 20% deposit, they're going to charge you even more.

[00:05:09]And that charge is going to come by way of interest rates. You have to acknowledge that first and foremost.

[00:05:16]Now, there's a lot of talk around how mortgages work. And you may or may not have heard the term amortization. I did a video, I think it was maybe last week or the week before, actually it's the week before, where I talked about some of the traps that middle-class, normal people fall into when it comes to being on the journey of trying to build wealth.

[00:05:38]And one of the big things is not having a clear sight on how much their mortgage actually costs. Because within a mortgage, you have something called amortization. And amortization is basically it's like a schedule on how much interest you pay on your mortgage versus how much you're paying off the capital that you owe. So, for example, if you're taking out mortgage with a hundred thousand pounds, for example, how much of your monthly mortgage payment goes towards capital versus interest. Now, most people, I did once upon a time, you would think, "Oh, maybe you're paying 50% interest, 50% goes off the hundred thousand pounds that you owe."

[00:06:16]That is not the truth.

[00:06:18]With amortization, particularly in the early years of your mortgage, you are paying probably 80, 85% interest, meaning there is only a small amount going on to repay the hundred thousand pounds that you owe in this example. And in the first five years of your mortgage, especially if you're taking out 5% deposit mortgage, what will typically happen if you look at all of the deals is you are going to go on to a five-year fixed rate deal.

[00:06:46]Now, there are pros and cons to this, right?

[00:06:49]And I think it's really important to be upfront about this and how this works.

[00:06:53]For the borrower, so the people giving you the money, the mortgage borrower, it means that they can lock you into a five-year plan paying a premium of one to one and a half percent.

[00:07:05]So, they make a lot of money, and over that five-year period of time, they know that they have X amount of income coming in.

[00:07:12]And X amount of interest is going to be paid, which means X amount of profit at the bottom line.

[00:07:18]For you as the borrower, you know that your finances will be fixed for the next five years. Your mortgage cost will be fixed for the for the next five years, which can be a good thing when it comes to budgeting, financial planning for the five-year period itself.

[00:07:35]But with amortization, again, because you're paying a lot of that interest front-loaded, it's great for the banks, massively.

[00:07:43]Now, it's not a bad thing. I think if you're prudent and you understand how things work, that 5 years should be used to really think about, "Okay, cool. So, how do I overpay the mortgage? How do I pay a lump sum of that mortgage after the 5-year or during the 5-year period or after the 5-year term ends?"

[00:08:01]Hopefully, rates are lower and you'll be able to access something a little bit more affordable for you, but you should not forget that the amortization period, well, how amortization works, means that you're going to be paying a premium because you get locked into a higher rate years. After the first 5 years is done, you need to take stock massively. And I think because there was a lot of choice, choice is good. I mean, 537 of these tells you that, well, there is a market for this thing. But I think it's first-time buyers filtering what those choices are becomes a problem. And this is where you're going to need a proper mortgage advisor to really assist you in understanding what it is that you're doing. The other thing that I want to mention is this. And a lot of first-time buyers will overlook this.

[00:08:46]Like I said, I I used to be a financial advisor. I used to be a mortgage advisor. And in it on a a 5% deposit mortgage, if you have credit cards, pay uh personal loans, car finance, you need to have some foresight because those things will impact how much you can borrow. And the affordability calculations that you're going to go through on a 5% deposit mortgage is going to be extremely strict.

[00:09:15]So, let's just say under the normal circumstances you could borrow five times your salary, right?

[00:09:20]Let's say you're earning out of the 50K, that's £250,000 that you can that you could borrow. If you have car finance, if you have uh personal loans, credit cards, they're going to take all of those things as committed expenditure, meaning you owe other people money.

[00:09:37]So, whereas you might be able to, you know, borrow 250,000 pounds on paper, but at some point they take into account all of the debts that you owe, they might say, "Well, actually, now we're only going to lend you 220,000 pounds."

[00:09:50]So, 30,000 pounds gets wiped off how much you can borrow immediately purely because you have debts. And this is where the foresight comes in. You need to have a debt repayment strategy well ahead of your time applying for the mortgage itself. So, please, look, you've got a couple of challenges with coming up with the deposit in the first place, but you also have to think about having a second track around addressing your debt. I see too many people get into this cycle where they've got the deposit, they've done the hard work, then they realize, "Oh my god, my debt means I can borrow 30K less.

[00:10:29]I now need to have a strategy for that."

[00:10:31]I think if you can do both of those two things in tandem, that will massively massively help you. And if you need help around that, there are lots of bodies that you can work with. StepChange, for example. I would not recommend that you go down the route of things like uh debt repayment plans, IVAs. That will destroy your chance of getting a mortgage, period. So, don't go down that route, but you can use the like StepChange, or you can work with me in the community to actually help you structure and plan around how you pay down your debt based on what you're earning right now. There is a link to the community in the show notes down below. The other thing that I think that is worthwhile bearing in mind is that there is a huge conversation around whether or not buying your first home is worthwhile these days. In fact, there was a comment on YouTube uh about 2 weeks ago where someone said, "I don't see the point in buying buying a house, buying a mortgage, because how do you know that you're going to be able to afford the mortgage payments?

[00:11:35]To which I responded, well, how do you know that you're going to be able to afford rent?

[00:11:41]To most parts of the UK, and I need to perhaps do a different conversation about this and video on this specifically.

[00:11:49]In most parts of the UK, a mortgage costs less than your monthly rent.

[00:11:55]So, the thing that used to frustrate me when I was a mortgage advisor was I would have people come in and would say, "No, you can't afford a mortgage."

[00:12:03]But they're paying more in rent than they would do the mortgage in the first place, and it always used to really frustrate me and blow my mind. And I think as a first-time buyer, there is a lot of noise, mainly coming from American influencers and being perpetuated on massive podcasts now that buying your first home, or the house that you live in, is a big mistake. I I disagree wholeheartedly. Coming from a financial planning background, and again, this will be another conversation that we need to have, but I just want to leave you with this thought.

[00:12:34]Look at the people who are telling you this. Most of them have assets. Most of them have cash, investments. They have a lot of things that you don't have as a normal person.

[00:12:46]So, the choice of them buying their home, they could if they wanted to, but they don't because they probably like the idea of flexibility and freedom and whatever it is that they that they spout to put people off.

[00:12:58]And the most sinister thing is, most of these people, the originators of this narrative, were all people who invested in property, who have rental properties.

[00:13:07]So, of course they're going to tell you, "Don't purchase your first home, rent."

[00:13:12]Because a lot of them own the properties that you would rent. And whilst you're renting, you're paying down their mortgage, so they then own the assets mortgage-free, debt-free, which adds massively to their net worth.

[00:13:23]You've got to be really discerning as a first-time buyer. And it's really discouraging to me when I hear 20-somethings say that they're not going to bother with uh buying the first home.

[00:13:32]If your if your reason for that is deposits are too high and it's a little uh too expensive, I'm on board with you.

[00:13:40]I completely understand it. What we've discussed today around the 5% deposit mortgages is a solution to that. But to say it's because you've heard people say this on social media, I feel like that is such a shame. And again, we'll jump into another conversation about this later on, but I need to do a full analysis and hopefully cut through the noise of this because it is heartbreaking for me to hear this from 20-somethings and even 30-somethings now. It is hard, yes. I'm not saying that it isn't. It was very, very difficult for me to come up with my deposit. It takes discipline.

[00:14:10]But I think if you lean into the bigger plan, think beyond just next year, the next 2 3 years, and think more long-term, I still wholeheartedly believe that home ownership is worthwhile in the end when it comes to long-term financial plan. I mean, who wants to be paying rent when they retire, right?