Mortgage deal for first-time buyers with a 1% deposit

First-time buyers will be able to get on the property ladder with as little as a 1 per cent deposit under a new type of mortgage being released by one of Britain’s largest lenders.

Yorkshire Building Society (YBS) is to release a five-year fixed-rate deal on Wednesday at 5.99 per cent that will require only a £5,000 deposit. It can be used to buy properties worth up to £500,000. It cannot be used on either newbuilds or flats, and buyers will still have to pass the usual affordability checks.

YBS said that the new type of loan could help shave years off how long it would take first-time buyers to save for a deposit. Banks have typically required at least a 5 per cent deposit