95% LTV Mortgage
In this guide
- What is a 95% loan-to-value mortgage?
- Best 95% LTV mortgages
- Compare 95% LTV (5% deposit) mortgage deals
- Should I get a 95% LTV mortgage?
- ↘ Affordability & eligibility criteria
- ↘ 95% LTV mortgages considered by most home buyers
- ↘ 95% LTV Moving Home Mortgages
- ↘ 95% First Time Buyer Mortgages
- ↘ 95% LTV mortgages on new build properties
- ↘ Buy to let mortgages 95% LTV
- ↘ Remortgaging onto a 95% LTV deal
- Frequently Asked Questions
If you’re looking for a 95% loan to value mortgage (5% deposit mortgage) for your next home, our team of expert advisers are here to help. We will advise you on the best deals for your specific needs and will support you through every aspect of the application process.
Furthermore, all of our services are fee-free, so you can benefit from free mortgage advice and support with no hidden charges!
What Is A Loan-To-Value Mortgage?
When you consider the range of mortgage loans available, your lender will refer to the ratio. This ratio is known as the ‘loan to value’ (LTV).
The LTV is the size of the loan relative to the total value of the property you are purchasing. It is always expressed as a percentage, so in the context of this guide, it could be a 95% LTV, which is the maximum LTV available.
We go into more detail here: Loan-To-Value explained
What Is A 95% LTV Mortgage?
A 95 LTV mortgage is a secured loan that covers 95% of a property’s value. So, if you were to opt for this type of mortgage, you would need to provide a deposit of 5% of the value of the property and the lender would cover the remaining 95%.
Example: 5% deposit mortgages on a £200,000 house
If the property was valued at £200,00, a 95 LTV mortgage would cover £190,000.
The £190,000 is 95% of the property’s value so you need to cover the remaining 5% deposit, which in this case, would be the remaining £10,000.
Are 95% mortgages available?
95 LTV mortgages have been hard to come by over the last couple of years as many lenders withdrew them drew to economic uncertainty and the financial risk to themselves during the pandemic.
However, to help the housing market and economy get back on track, the government has recently persuaded mortgage lenders to offer them again. They have done this by introducing the mortgage guarantee scheme, which is designed to make lenders more willing to offer high LTV mortgages. If buyers fail to make their repayments, the Government will now compensate lenders a portion of their losses if any properties need to be repossessed.
As such, lenders are now in a better position to make 95% mortgages available again as there is less risk to them. This has been instrumental in keeping the housing market running and has seen an increase in house prices and giving first-time buyers the opportunity to get on the property ladder.
Best 95% LTV mortgages
As most major lenders are offering 95 LTV mortgages again, now is the time to consider them if you’re a first-time buyer or looking for a low deposit mortgage. But with so much choice out there, choosing which deal and lender to go for can be difficult.
This is where we come in. As a whole of market mortgage broker, we have access to thousands of mortgage deals from both high street and niche lenders, so can point you towards the most competitive deals on the market. These will include 95 LTV mortgages though we will ask you to take the following into consideration when giving you our fee-free mortgage advice.
Interest Rates
When choosing a mortgage, you have a choice of fixed-rate or tracker (variable rate) deals.
If you choose a 95% fixed-rate mortgage, your mortgage repayments won’t change over time. This can give you peace of mind as you won’t have to worry about the interest rate suddenly going up. However, one disadvantage of a fixed-rate mortgage is that you won’t benefit if the interest rate goes down, as you will have to pay the same mortgage amount for the duration of your mortgage term.
If you choose a tracker mortgage, the repayments on your mortgage could change over time, depending on the Bank of England base rate. So, while your monthly payments could fall they might also rise, so you would need to budget your finances for this possibility.
If you wanted something that would help you to budget better, a fixed rate deal could be better for you than a tracker mortgage with a variable rate.
Interest-only or repayment mortgage
When choosing a mortgage, you will often have the option of choosing either an interest-only mortgage or a repayment mortgage.
With an interest-only mortgage, your monthly repayments will be cheaper as you will be paying off the interest each month, and not the loan capital. However, you will need to have a financial plan in place, as once your mortgage deal ends, you will need to pay off the remainder of your mortgage.
A repayment mortgage will equate to higher monthly mortgage payments as you’ll be repaying part of the whole loan each month and not just the interest. Despite the extra expense, you can have greater peace of mind if you are able to afford this option, as you will have the knowledge that your mortgage will be fully paid off at the end of the mortgage term.
There are other pros and cons to consider when taking out an interest-only or repayment mortgage, so get in touch with our team for a detailed discussion of both.
95% Mortgage Fees and Incentives
Mortgage fees
When saving for your mortgage, you need to factor in the fees your mortgage lender will charge you. These will include the arrangement fee, booking fee, and completion fee, alongside some of these other charges.
Your expenses will vary depending on the lender you choose, so talk to our team, as we will point you towards the lenders that may offer a reduction in their charges.
Cashback and incentives
As an incentive to customers, some lenders offer cashback on completion. For example, you may have to pay a £450 arrangement fee for a mortgage product, but if you get £1000 cashback on completion, you will be £550 better off!
Talk to our team to learn more about these cashback incentives.
Fee-Free Mortgage Broker
You will have expenses to pay on your mortgage but for your peace of mind, we would like to let you know that we don’t charge a fee for our services. As such, you will save money if you rely on the help of our expert team, as you can benefit from fee-free advice and support AND potential savings on a 95% LTV mortgage.
Better Credit Scores Allow For Greater Affordability
Lenders will take your credit history into account when deciding whether to offer you a 95% LTV mortgage.
This is because of the risk to them. If you have a low credit score, it may be because you haven’t managed debt responsibly in the past, so they may doubt your ability to make repayments on your mortgage. If your credit score is excellent, on the other hand, they will have more confidence in lending you 95% of a property’s value.
If you know your credit rating is less than excellent, you should do what you can to improve it before you apply for a mortgage. If you are unsure about your score, you can check it for free at Experian, Equifax, and ClearScore. You will find plenty of advice online on ways to improve your score, so do all that is necessary before making a mortgage application.
Assessing Your Affordability
As part of the lender’s mortgage eligibility criteria, you will need to show them that you are able to afford your repayments. Your lender will ask to see evidence of your income and outgoings, such as your payslips and utility bills, as well as details of any debts you hold.
The mortgages offered to you will depend on your affordability, so it may be that you’re encouraged to take out a loan with a lower LTV, depending on the amounts they think you will be able to cover on your outstanding mortgage.
Use our mortgage calculator to find out the types of mortgage you may be able to afford.
Compare 95% LTV (5% deposit) mortgage deals
There are over 90 different banks and building societies in the UK offering over 14,000 different mortgage rates. There are different ways to search and compare deals within the mortgage market, including the following.
Benefit From Fee Free Mortgage Brokers
This is by far the better option for you. When you are comparing prices on residential properties, talk to a member of our expert team. We will compare all the different rates in the UK and will point you to those that we think you’ll be able to afford. This will help you narrow down your property search as you will have a better idea of which homes are in your price range.
Search Deals From Banks and Building Societies
After comparing deals at your own bank or building society, you then have a choice of 14,000 deals to compare from over 90 different lenders. Needless to say, this will require a lot of time and effort, which is why we recommend our services to you. We are a ‘whole of market’ broker with access to lenders you may not find through your own search and we have the ability to pinpoint the best deals for our customers.
Using Online Comparison Tools
There are lots of comparison websites online so you can easily commit to a search of mortgage products. However, some comparison websites are biased as companies often pay them to list their products higher in search results. As such, you may not get the best competitive deal, despite the ‘top’ offers being advertised to you. Instead, choose the services of our mortgage brokers, as we offer unbiased and free advice to all of our customers. Check out our reviews for evidence of the honest service we provide.
Should I get a 95% LTV mortgage?
Because 95% LTV mortgages are an affordable way to get on the property ladder sooner, they may be of interest to you if you’re a first-time buyer. As they are the cheapest type of loan to value mortgage, they may also be of interest to you if you’re looking to move house or remortgage.
However, while a smaller deposit can initially appear attractive, it is important to know that 95 LTV mortgages typically come with high-interest rates. So, despite the small deposit, you will incur larger monthly payments. This is something worth thinking about when you compare mortgages. High LTV mortgages are certainly very useful but you do need to have the finances in place to make those monthly mortgage repayments, as your home may be repossessed if you don’t.
Affordability & eligibility criteria
If you have the ability to pay the 5% deposit, and you can meet the lender’s affordability and eligibility criteria, then you may want to consider the 95 LTV mortgages on offer.
To find out whether this type of mortgage is right for you, consider your financial position before applying. Consider your earnings in relation to your monthly expenses to figure out how much you can afford to pay each month. If you think you have the ability to make the expected repayments, including the fees charged by the lender, then a 95 mortgage could be right for you.
To find out what the repayments on your mortgage might be, use a mortgage calculator or seek advice from one of our mortgage advisors. It might be that you can afford to make a bigger deposit, in which case, you might want to consider a 90% LTV mortgage or something even lower. If you can only afford a small deposit, then a 95% LTV mortgage will be the better option.
First-Time Buyer Options to get on the property ladder
95% loan to value mortgages can be very attractive to first-time buyers who can’t afford to make a large deposit. With only 5% needed, this can be your way onto the property ladder if you are thinking about buying your first home.
Of course, if you can pay a bigger deposit then do so, as you will secure lower interest rates, perhaps through a 90% or 85% LTV mortgage. If you can’t afford to make that larger deposit, then a 95 mortgage could be better for you.
Can I Get A 95 LTV Mortgage If I Am Moving Home?
Mortgages of this kind are often reserved for first-time buyers but providing your current home isn’t in negative equity, you may still be able to secure a 95% LTV mortgage. You would need enough money for the deposit, either through equity you have built up in your home or your savings, and you would need to meet the eligibility criteria of the lender before they offer you a new mortgage.
Avoid an early repayment charge
To avoid an early repayment charge, you should first consider porting your existing mortgage. This is especially true if you are happy with your current deal as this will rule out any additional borrowing. Your mortgage advisor will recommend this option to you if they think it is more cost-effective than a 95% LTV mortgage. Get in touch with us to learn more.
Can I Get A 95 LTV Mortgage On A New Build Home?
As 5% deposits have made a comeback, it is now possible to purchase a new build property through a 95% LTV mortgage via specific lenders. Skipton Building Society is one such lender and certain others have followed suit, partly because of the mortgage guarantee scheme that reduces financial risk. Some new build homes can also be purchased through affordable home schemes, such as Shared Ownership and Help to Buy, so there is further incentive to buy a new build home.
To find out which lenders will offer you a 95 LTV mortgage loan on a new build home, get in touch with our team today.
Can I Get A 95 LTV Mortgage On A Buy-To-Let?
You are very unlikely to get a 95 LTV mortgage for a buy-to-let as lenders often require a deposit of 25% of the property’s value. Therefore, you would usually need a lower LTV mortgage, such as something at 85%.
We can consider all of your available options with you, so do get in touch with us for more information on the mortgage deals you may be eligible for.
Can I Remortgage Onto A 95 LTV Deal?
Most mortgage lenders will prefer you to put down a bigger deposit but there might still be those who will accept 5%. Your chances have been made higher because of the mortgage guarantee scheme as there is a lower risk for lenders. Still, your choices may be limited, but as we can access the lenders who will offer 95 LTV deals, you have a better chance of success if you use our services.
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Frequently Asked Mortgage Questions
Can I get a 95% LTV mortgage?
Yes, you can get a 95% loan to value mortgage, depending on your affordability. Most mortgage lenders withdrew their 95 mortgages due to the economic uncertainty of the COVID-19 pandemic. However following on from the mortgage guarantee scheme launched by the government, many lenders are now more confident to offer this type of mortgage again.
Please note: The government-backed scheme runs until 31 December 2022, so whether you’re a home mover or first-time buyer, you stand a better chance of a 95 LTV mortgage if you get your application in before that date.
Can I get a 95% mortgage on a flat?
It may be possible to get a 95% mortgage on a flat, but it’s not as easy to do so when compared with buying a house. Most lenders will go up to 90% of the purchase price so you may struggle to find 95 LTV deals. However, our team of mortgage brokers will advise you further, with a discussion of the LTV deals that are currently available.
Can you get a mortgage with 5% deposit?
Yes, you can get a 5% deposit mortgage also known as a 95% loan to value mortgage. If you are keen to get on the property ladder and/or you can only afford to put down a small deposit, then a 5% deposit mortgage could be for you. Many prospective buyers favour 95% loans for these reasons. However, you will save yourself a lot of money over time if you can put down a larger deposit, as you will avoid high loan costs due to the lower interest rates you will be eligible for.
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