Santander Unveils 98 Percent Mortgage For First-Time Buyers

On February 3, 2026, Santander, one of Britain’s largest high street banks, made waves in the mortgage market by launching a new product aimed squarely at first-time buyers struggling to amass hefty deposits. The bank’s “My First Mortgage” offering allows borrowers to secure a home loan covering up to 98% of a property’s value, with a minimum deposit of just £10,000. This bold move marks the first time in years that a major high street lender has broken through the traditional 95% borrowing ceiling, a development hailed by some as a major step toward easing the path to homeownership for many would-be buyers.

The new mortgage is a five-year fixed-rate deal, priced at 5.19%, with no product fee and a £250 cashback incentive. Borrowers can access loans of up to £500,000, repayable over terms ranging from five to 40 years, provided they meet Santander’s affordability checks. For this particular mortgage, those checks mean a maximum loan of 4.45 times the applicant’s salary. Notably, the deal is available exclusively to first-time buyers, and both applicants must be first-time purchasers in the case of joint applications. Self-employed buyers are excluded, as are those seeking to purchase flats, new-build homes, or properties in Northern Ireland. Lending between 95% and 98% loan-to-value (LTV) is restricted to second-hand properties, reflecting Santander’s data showing that two thirds of its first-time buyers last year purchased existing houses rather than new-builds.

David Morris, head of homes at Santander UK, explained the rationale behind the new offering, stating, “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 £85,000, 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.” He added, “We want to help more people benefit from the stability and sense of pride that owning a home brings. 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.”

The product is available through intermediaries and Santander mortgage advisers, broadening access for those who may not have direct relationships with the bank. The bank’s own research highlights the scale of the challenge facing first-time buyers: 52% of UK adults identified saving for a deposit as the single biggest barrier to getting onto the housing ladder. In this context, a £10,000 minimum deposit represents a significant reduction compared to the average deposit of over £85,000 reported by Santander’s first-time buyers last year.

Mortgage brokers and industry experts have largely welcomed the move, while also sounding notes of caution about its limitations and potential risks. David Hollingworth, associate director at L&C Mortgages, described the mortgage as “an important addition from a major lender, adding to the growing ranks of mortgages designed to ease the struggles of first-time buyers.” He continued, “There’s an increasingly healthy range of mortgages for those with little or no deposit. These products do carry eligibility requirements so won’t fit everyone’s requirements and a bigger deposit will still offer a wider choice with lower rates. However, the new Santander deal should help more to access homeownership sooner than they may have thought possible.”

Nicholas Mendes, mortgage technical manager at John Charcol, emphasized the significance of a 98% LTV offer from a mainstream high street brand, noting, “Santander are the latest lender to help first-time buyers with less than 5% deposit, and they are the first mainstream high street name to go beyond 95% LTV and push to 98%. That is a big psychological shift for this part of the market, because for many renters the monthly payment has not been the issue, it has been building the deposit while rent, bills and childcare costs keep moving up.” Mendes cautioned, however, that “on the numbers, it will not suit everyone and it is not trying to. 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. The main consideration is the lack of headroom. At 98% 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.”

Paula Higgins, chief executive of the HomeOwners Alliance, echoed these sentiments, pointing out that “a 98% mortgage from a major lender could make a real difference for some, but the strict eligibility criteria would limit how widely the product was adopted.” She added, “Taken together, these restrictions raise real questions about how many first-time buyers can realistically benefit, particularly in higher-priced parts of the south-east where £500,000 may not go far.” The exclusion of flats from the deal drew particular criticism, given that flats are often the main route into homeownership in urban areas such as London, where the average house price stood at £539,000 in December 2025, according to Halifax data. Higgins warned that this restriction “is a worrying signal and risks putting ownership further out of reach for many.”

Aaron Strutt, at the broker Trinity Financial, noted that Santander’s move “may well tempt other big lenders back into offering more sub-5% deposit mortgages to new customers.” However, he also pointed out that those hoping to borrow the maximum £500,000 will need to earn more than £112,000 a year, as the most Santander will lend someone taking the 98% deal is 4.45 times their salary. For those borrowing up to 95%, the bank may lend up to 5.5 times salary, and other lenders such as Nationwide and NatWest are now allowing some homebuyers to borrow up to six times their income.

While Santander’s 98% mortgage is not the only high LTV product on the market—Skipton and Yorkshire building societies have offered deals at 100% and 99% LTV, respectively—it is significant for being the first such offering from a major high street bank in recent years. The move comes as the City regulator and the Bank of England have both signaled a willingness to support innovations that help more people access homeownership, in response to shifting economic realities and changing patterns of work and living.

Despite the excitement, experts agree that the deal is not for everyone. The strict eligibility criteria, the risk of negative equity, and the relatively high income requirements for maximum borrowing mean that many would-be buyers—particularly those in expensive regions or with less stable employment—may find themselves excluded. Nevertheless, the launch of My First Mortgage stands as a sign that the mortgage market is evolving, with lenders responding to the needs of a new generation of buyers for whom scraping together a deposit is the greatest challenge of all.

As the dust settles on Santander’s announcement, all eyes will be on how many first-time buyers are able to take advantage of this new route onto the property ladder—and whether other major lenders will follow suit in the months to come.