What’s the deal with 99% mortgages? The pros and cons, explained

What’s the deal with 99% mortgages? The pros and cons, explained

One of the biggest barriers first time buyers face is cobbling together a hefty deposit. So could a 99% mortgage be the answer? 

More formally known as the 5K Deposit Mortgage, the product was launched by Accord Mortgages at the end of March 2024 with one mission in mind: to help first time buyers buy their first home faster. 

“There’s pros and cons to this type of mortgage,” Jo Jingree, award-winning mortgage adviser says. “But for those paying sky high rents and unable to save more than they would like to each month, a 99% mortgage could help move the goalposts closer. It could be just the thing to help first time buyers get onto the ladder.”


So, what is the 99% mortgage?

As its name suggests, a 99% mortgage is when a buyer needs to put down a deposit worth 1% of the value of the property they are looking to buy. The mortgage lender will then stump up the remaining value of the property (so the 99%), which will need to be paid back over a fixed term on a fixed interest rate. 

This specific mortgage deal, offered by Accord Mortgage, is only available to first time buyers and it comes with a few other caveats, including: 

  • There must be a minimum deposit of £5,000.
  • This mortgage is only applicable to houses. It does not apply to flats or new builds. Properties in Northern Ireland are excluded from the mortgage deal. 
  • The house must be worth at least £100,001 and no more than £500,000.
  • The mortgage loan can be worth up to 99% of the property’s value.
  • The maximum mortgage term is 40 years. 
  • The mortgage must be fixed for 5 years. 
  • If applying for a joint mortgage, one person must be a first time buyer. Neither person can currently be a property owner. Plus, both applicants must be 70 or under at the end of the mortgage term.

99% mortgages: the cons


1. Possibility of negative equity occurring

The major drawback of a 99% mortgage is the potential for negative equity to occur. 

“Negative equity is when your home becomes worth less than the remaining value of your mortgage,” Jo explains. “However, when you buy a home, there is always going to be a risk. House prices fluctuate over time.”


99% mortgages: the pros


1. You don’t need a chunky deposit

According to Statistica, the average first time buyer deposit amounts to 19% of the property purchase price — which, at the end of 2023, stood at an average of £53,000! 

But with this mortgage, depending on the value of the property and if you meet the criteria, minimum deposits start from £5,000. 


2. You’re paying your own mortgage, not somebody else’s 

We’ve spoken before about the pros and cons of renting vs buying. But one main benefit of buying a home is that you’ll be mortgage free (at some point). And this mortgage is no different. 

Whether you take out a term of 25 or 35 years, this is the length of time that you pay back your mortgage. In the case of this 99% mortgage offering, if you’re eligible, the maximum term is 40 years. But either way, once you come to the end of your term, you’ll own your four walls outright.


3. You can overpay your mortgage by 10%

Negative equity still on your mind? Well, if suitable, you could overpay on your mortgage each month or year. With this particular mortgage, the lender allows for a 10% overpayment allowance per annum. 

“This is one way of getting equity to increase over time,” Jo says. “Overpaying will also decrease the amount of interest you pay and cut down the time it takes you to clear your mortgage.”


Interested in getting on the ladder?

At Mortgage Confidence, we offer a free 30-minute consultation to help with these sorts of enquiries and more to make sense of it all. After finding out your personal situation, Jo can talk through whether or not this mortgage might be suitable for you. 

So, no matter whether you’re currently renting but are looking to buy, or you’ve not left home yet, we can explore your options. 

Get in touch with award-winning mortgage adviser Jo to get the ball rolling.


There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £399 and this will be discussed and agreed with you at the earliest opportunity. Your home may be repossessed if you do not keep up repayments on your mortgage.

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