Santander has announced a new “My First Mortgage” product aimed at helping first-time buyers who are struggling to save a full 5% deposit. The headline feature is the ability to buy with just a 2% deposit, as long as the deposit is at least £10,000.
This could make home ownership more achievable for buyers who have strong affordability but are finding it difficult to build up a larger deposit.
🔑 Key Features
- 2% deposit required (minimum £10,000)
- Five-year fixed rate at 5.19%
- £250 cashback
- No product fee
- Up to 98% loan-to-value (LTV)
- Houses only – not available for flats or new builds
- Maximum purchase price: £500,000
- First-time buyers only
A Helpful Option - But Not Always the Cheapest ⚖️
It’s important to understand how this compares to existing mortgage options.
For example, if you’re buying at £200,000 and you have a £10,000 deposit, that actually works out as a 95% LTV mortgage. At the moment, 95% LTV rates are generally lower than the new 98% option.
So, while the 2% deposit product can be a great solution for buyers who have strong affordability but are not quite there yet with the full 5% deposit, it won’t always be the most cost-effective choice. Comparing both options is essential.
2-Year Fix vs 5-Year Fix - Important to Consider
It’s also worth noting that 2-year fixed rates currently offer more flexibility and are priced lower than the 5-year fixed rate attached to the 2% deposit product.
If interest rates continue to fall over the next couple of years—which many buyers are hoping for—someone tied into a 5-year fixed deal at 98% LTV may not benefit from future reductions until their fixed period ends.
For some buyers, a 95% LTV 2-year fix could offer:
- Lower initial rates
- More flexibility
- The opportunity to switch to a better deal sooner
This is why comparing both routes is so important.
Who This Could Help 🤝
This product may suit buyers who:
- Have stable income and strong affordability.
- Can comfortably manage repayments.
- Are struggling to save a full 5% deposit.
- Want to buy sooner rather than later.
It’s less suitable for buyers who already have a 5% deposit saved, as they may access lower rates with a standard 95% LTV mortgage.
Final Thoughts
The Santander 2% deposit mortgage is a welcome addition for first-time buyers who need that extra bit of help to get onto the property ladder. But like any mortgage, it’s important to look at the full picture, including long-term costs, interest rates, flexibility, and alternative options.
If you’d like to explore whether this could work for you, I’m always happy to talk through the details and compare it with other lenders.
Best wishes,
Craig Adams CeMAP
Mortgage & Protection Advisor
Crosby / Waterloo / Liverpool
📞 Contact number: 07495 753484
✉️ Email: ca@mhwifa.co.uk
⚠️ You could lose your property if you do not keep up payments on your mortgage.
