Santander has become the first major high street lender to offer mortgages beyond 95% LTV, launching a 98% product aimed at deposit-stretched first-time buyers.
The bank’s ‘My First Mortgage’ is a five-year fix at 5.19% with no product fee and £250 cashback, requiring just a 2% deposit from buyers.
The move puts Santander ahead of rivals like Nationwide and Halifax in the ultra-high LTV space, a market previously dominated by building societies such as Skipton and Leeds. Until now, mainstream high street banks had capped lending at 95%.
Available exclusively to first-time buyers through Santander advisers or brokers, the product responds to research showing 52% of UK adults cite deposit-saving as their biggest barrier to homeownership.
The product requires a minimum £10,000 deposit, with maximum lending of £500,000 over terms from five to 40 years. The 98% LTV tier applies to existing houses only—flats and new builds are capped at 95% LTV.
All lending is subject to standard affordability checks, including a 4.45x salary cap.
David Morris, Head of Homes for Santander UK said: “We know that saving for a deposit remains one of the biggest hurdles to homeownership. Last year, the average first-time buyer with Santander put down a deposit of more than £85,0003, 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, while maintaining our position as a responsible lender. 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.”
On the numbers, Santander’s latest mortgage deal will not suit everyone and it is not trying to, according to Nicholas Mendes, mortgage technical manger at John Charcol.
He commented: “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 per cent 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 per cent or 90 per cent 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.”