Lloyds is introducing a new deal for Brits to take advantage of. The low-deposit mortgage could enable first-time buyers to step onto the property ladder with a deposit as little as £5,000.

The new offering is targeted at tenants who are already managing substantial regular housing expenses, but who may lack financial backing. Lloyds stated the divide between typical rents and mortgage repayments has narrowed.

Numerous tenants are already paying as much monthly as they would on a mortgage. The bank indicated that the new mortgage could cut the time needed to save a deposit by years for some purchasers.

First-time buyers struggling to save for a home deposit could soon get on the property ladder with just £5,000 upfront.

The new mortgage is accessible for properties valued up to £300,000 and has a maximum loan-to-value of just over 98 per cent. Brits can borrow up to four-and-a-half times their salary with the five-year fixed-rate mortgage deal.

The mortgage product will carry an interest rate of 5.89 per cent when it officially launches on May 18. The deal is available to both employed and self-employed applicants. Applicants will need to pass strict affordability and credit checks.

The borrowing term is up to 40 years and the product will be offered UK-wide. Borrowers making purchases involving shared ownership schemes, new build homes and with gifted deposits are not eligible.

Amanda Bryden, head of mortgages at Lloyds, said those who are doing everything right still feel locked out of home ownership because saving a big enough deposit seems impossible.

Many would-be buyers are already paying as much in rent as they would on a mortgage. By cutting the upfront cost to £5,000, Lloyds is breaking down a major barrier to getting on the property ladder. This gives people a better chance to own their first home.

Lloyds revealed the average first-time buyer is now 32 - two years older than a decade ago - as rising rental costs and increased living expenses have made saving more challenging. Various other lenders provide low or zero-deposit mortgages.

In February, Santander UK introduced a mortgage requiring a minimum deposit of £10,000. Skipton Building Society similarly offers mortgages with low to zero deposit alternatives.

Andrew Montlake, chief executive of Coreco mortgage advisers, said this is a genuine shot in the arm for aspiring home buyers, especially those who don't have the luxury of the bank of mum and dad behind them. For many would-be buyers, the issue is not whether they can afford the monthly mortgage payments.

The real mountain to climb is saving a big enough deposit while rents, bills and everyday living costs continue to take a hefty bite out of their income.

There are already some decent low-deposit and even 100 per cent mortgage options out there, but when one of the UK's biggest lenders puts its weight behind this part of the market, it matters. It sends a message of confidence and gives more borrowers a realistic route onto the housing ladder.

David Hollingworth, associate director at L&C Mortgages, said this new launch is significant as it marks another major high street lender developing solutions for those with a small deposit. We've seen a growing range of lenders in this space, designing products that could significantly speed up the journey to home ownership.

There are now several deals where it could be possible to borrow more than 98 per cent of the purchase price or even require no deposit at all. This will help those that have good affordability but are being held back by the need for the traditional deposit of 5 per cent or more.

Smaller deposits can increase the risk of buyers falling into negative equity. This can occur when property values drop and the outstanding mortgage exceeds the worth of the home.

However, he added that only becomes a problem where the property needs to be sold, which would crystallise a loss.