If you’ve been trying to buy your next home but haven’t yet saved up a big enough deposit, you could be eligible to apply for a 95% loan to value (LTV) mortgage. This means that you may be able to buy a home with just a 5% deposit. Within this article we’ll cover everything that you need to know about 95% LTV mortgages…
The 95% mortgage scheme has officially launched from 19th April 2021. The scheme is being offered by a number of high street lenders across the country including Lloyds, Santander, Barclays, HSBC and NatWest.
Are you interested in a 95% mortgage? Find a mortgage today by contacting our team, we search the market with over 11,000 products from over 90+ lenders; so we’ll always find the right deal for your circumstances.
What is a 95% mortgage?
First things first – a 95% mortgage is a type of mortgage that allows you to borrow 95% of the property price from a lender. The remaining 5% is covered through your deposit.
How are can I get access to these mortgages?
The UK Government have introduced a new scheme to incentivise lenders to reintroduce 95% mortgage deals from 19th April 2021. These types of mortgages have been available previously; but the number of 95% mortgage products had largely decreased during the Covid-19 pandemic.
The new mortgage guarantee scheme will see the UK Government act as a safety net for lenders. In the worst case scenario, if or where the property is repossessed and sold at a loss, the Government will take on some of the losses incurred by the lender. In return, lenders will have greater incentive to offer 95% mortgage products to people looking to buy a new home, as they’ll carry less risk.
What do I need to know?
There’s a few things you should know about the new scheme:
- It launched from 19th April 2021
- You can purchase properties up to £600,000 with a 5% deposit
- It’s open to all homebuyers (not just first time buyers)
- Normal mortgage affordability checks will still be in place (i.e., you may only be offered a loan worth four times your annual household income)
Will I be able to get a 95% mortgage?
As expected this all depends on your individual circumstances and affordability; this can be assessed by an expert mortgage adviser. However, as you only require a 5% deposit for a 95% LTV mortgage; many prospective homebuyers could find they have enough to buy their first property!
With a 95% LTV mortgage, your deposit could be as low as £10,000. You could even use savings from a Lifetime ISA to put towards your deposit. Want to find out whether a 95% mortgage product is right for you? Or maybe just fancy a chat to discuss your options? We’re always here to help. Feel free to get in touch and contact us today.
