If you’re struggling to save a large deposit, a 95% loan-to-value (LTV) mortgage might be for you. This type of mortgage allows you to buy a home with just a 5% deposit.
What is a 95% Mortgage?
A 95% mortgage means you can borrow 95% of the property price from a lender, with the remaining 5% covered by your deposit.
How are these mortgages available?
The UK Government introduced a scheme on April 19, 2021, to encourage lenders to offer 95% mortgages again. This scheme provides a safety net for lenders by covering some of their losses if a property is repossessed and sold at a loss. This reduces the risk for lenders and incentivises them to offer these mortgages.
Key Points to Know
- You can buy properties up to £600,000 with a 5% deposit.
- The scheme is open to all homebuyers, not just first-time buyers.
- Standard mortgage affordability checks still apply (e.g., loans may be limited to four times your annual household income).
Can I get a mortgage?
Your eligibility depends on your individual circumstances and affordability, which can be assessed by a mortgage adviser. However, with only a 5% deposit needed, many potential homebuyers might now be able to afford to buy their first property.
For example, a £200,000 home would require a £10,000 deposit with a 95% LTV mortgage, compared to a £20,000 deposit for a 90% LTV mortgage. You could also use savings from a Lifetime ISA for your deposit.
Need help?
Want to know if a 95% mortgage is right for you? Or just want to discuss your options? We’re here to help, get in touch with us today.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount will depend upon your circumstances.
The fee is up to 1% but a typical fee is £598.
