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First-time buyers are being offered the chance to pay a modest £5,000 deposit and potentially borrow up to 99% of a property’s value.

The mortgage from Yorkshire Building Society is valid on places up to £500,000 and comes without a fee – but there are a few key exceptions.

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It’s not available for flats or new-build properties and would-be borrowers must pass strict affordability and credit scoring checks.

The task of saving for a deposit is one of the barriers that many first-time buyers struggle with as most lenders like a minimum 10% up front.

Yorkshire Building Society’s mortgage director, Ben Merritt, said its research suggested £5,000 was the sum that could help young people get on the property ladder.

He said it could help produce a “level playing field for those who don’t have financial support from their families to fall back on”.

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Buyers need at least £5,000 as a deposit under the deal, which offers a five-year fixed interest rate of 5.99%.

The building society isn’t the only lender to offer deals aimed at first-time buyers, with 5% deposit deals available elsewhere. However they often come with higher interest rates.

With a small deposit, there is also a greater risk of falling into negative equity – owing more than your home is worth – if a property falls in value.

Skipton Building Society is another lender that has launched a product for first-time buyers.

Its track record mortgage looks at previous rent payments to assess what a person may be able to borrow – and a deposit is not required.

Again though, there are restrictions that mean new-build flats are excluded.

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Rachel Springall, from Moneyfactscompare.co.uk, said the Yorkshire mortgage would likely prove popular among first-time buyers and it would be interesting to see if others launch similar deals.

However, she cautioned that a larger deposit is always preferable and should work out cheaper long term.

“Anyone who borrows at a higher loan-to-value would be wise to overpay their mortgage whenever they can to gain more equity and aim to reach a lower loan-to-value bracket where cheaper deals could be found when they come to refinance,” said Ms Springall.

Higher interest rates in the last few years have also made mortgage repayments more expensive, but rates are expected to start to fall later this year as inflation is now nearing the government’s 2% target.

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