5% deposit schemes for second-time buyers

If you already own (or have owned) a home and you’re moving again, a 5% deposit mortgage can help you bridge the gap between selling your current property and buying your next one.

This guide explains the main types of 5% deposit routes that may be relevant to second-time buyers, what they’re designed for, and what to consider before you apply.

Can you get a 5% deposit mortgage as a second-time buyer?

In many cases, yes. There are a few routes that can make a 5% deposit possible, including government-backed and industry schemes, as well as shared ownership in certain situations.

While the exact rules vary by scheme and lender, most options will still require you to meet affordability checks and standard mortgage criteria.

The main 5% deposit schemes to consider

1) Mortgage Guarantee Scheme (95% LTV)

The Mortgage Guarantee Scheme is designed to support higher loan-to-value lending. It aims to increase the availability of 95% LTV mortgages by providing a guarantee to participating lenders.

Common points to note (scheme rules can change):

• It has typically been available where the deposit is between 5% and 9%.
• The property and mortgage must meet scheme requirements (for example, the property is usually expected to be your main residence).
• The mortgage product must be from a participating lender.

Why it matters for second-time buyers: If you’re moving and you’ve only got a small deposit available, this can be one of the routes to access a 95% LTV mortgage—provided you fit the scheme parameters.

2) Deposit Unlock mortgages (new-build focus)

Deposit Unlock mortgages are aimed at helping buyers purchase a new-build home with a 5% deposit.

Typical scheme themes:

• The property is usually required to be a new build.
• The home is generally expected to be from a participating housebuilder.
• There may be a price cap for the property.

Why it matters for second-time buyers: If you’re downsizing or upsizing into a new-build development, this route may be worth exploring—especially if your deposit is limited.

3) Shared Ownership (staircasing route)

Shared Ownership lets you buy a share of a property and pay rent on the remaining share (usually to a housing association or similar provider). Over time, you may be able to buy additional shares—known as staircasing.

What’s often required:

• You typically need a deposit of at least 5% of the share you’re buying.
• There are usually income and eligibility requirements.
• The property is generally expected to be new build.
• You’ll need to meet the housing provider’s criteria and the lender’s standard checks.

Why it matters for second-time buyers: Shared Ownership can sometimes be a practical option if you can’t afford to buy your next home outright on the open market, but you want to move and build equity over time.

Is it harder to get approved with a small deposit?

Not automatically. Approval depends on affordability and risk factors, not just deposit size.

However, with a 5% deposit (i.e., borrowing a larger percentage of the property value), you may find:

• Fewer lenders offer 95% LTV products.
• Higher rates and costs can be more common compared with lower LTV borrowing.
• Your monthly payments may be higher because you’re borrowing more.

A broker can help you understand what’s likely to be available for your specific situation and avoid wasting time on applications that don’t match the right criteria.

How a broker can help with 5% deposit options

A good mortgage broker can make a real difference when you’re trying to move with a small deposit—particularly as a second-time buyer.

They can:

• Check which routes (if any) you may be able to access based on the property type and your circumstances.
• Review your affordability profile and help you prepare the documentation lenders typically expect.
• Compare suitable mortgage products across lenders (including participating lenders where relevant).
• Help you plan the move so your mortgage application aligns with your timeline.

If you’re considering a 5% deposit route, it’s especially important to make sure the repayments are sustainable for the long term—not just affordable at the point of application.

Other options if a 5% deposit scheme isn’t suitable

If the routes above don’t fit your circumstances, there may still be ways to move with a limited deposit, such as:

• Other 95% LTV mortgages outside of the schemes (availability varies).
• Guarantor mortgages (where an eligible person may support the application). Some lenders may consider these for second-time buyers, but it depends on their criteria.

A broker can explain what’s realistic for your profile and help you compare the trade-offs.

Key questions to ask before you apply

Before you commit to a 5% deposit plan, it helps to clarify:

• Is the property type (new build vs existing) aligned with the route?
• Are there any price caps or other restrictions that apply?
• What repayment term and product type are you considering (and how does that affect monthly payments)?
• Do you have any additional costs to factor in (for example, fees, valuation, and potential insurance requirements)?
• How will your deposit be funded, and will it be available when you need it?

FAQs

Can I get a 5% deposit mortgage if I’m self-employed?

Yes, it can be possible. Self-employed applicants are assessed using lender-specific criteria, which may include how long you’ve been trading, the stability of your income, and the evidence you can provide.

Are 5% deposit schemes only for first-time buyers?

Not always. Some routes are designed with specific eligibility rules, but second-time buyers may still qualify depending on the scheme and the property you’re buying.

What’s the main risk of using a 5% deposit mortgage?

The main consideration is affordability. Borrowing more with a smaller deposit can mean higher monthly payments and potentially higher interest rates than lower LTV options. It’s important to choose a repayment plan you can comfortably manage.

If you’re planning a move and considering a 5% deposit route, speak to our team. We’ll help you understand which options are most likely to fit your situation and build a mortgage plan around your timeline.