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95% mortgages
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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
What is a 95% mortgage?
A 95% mortgage is where you borrow 95% of the cost of the home you want to buy - also described as having a 95% loan-to-value (LTV) ratio. You may also see this referred to as a 5% deposit mortgage, as that's how much you'll need to provide at this LTV.
This is the largest LTV that most mortgage lenders will lend at, although there is currently one 100% mortgage product on the market. It may also be possible to borrow upwards of 95% through a guarantor style mortgage.
How do 95% mortgages work?
With a 95% mortgages, you pay a deposit worth 5% of the property value. The mortgage lender then loans you the remaining 95%.
Example: For a property costing £150,000 you'd need £7,500 for a 5% deposit. Your lender would then lend you £142,500 to cover the remaining 95%.
You'll repay the 95% loan over the full term of the mortgage alongside interest payments. The interest rate depends on the deal you get, however, you can usually remortgage onto a new rate once each deal ends.
According to UK remortgage statistics, the average interest rate for a 95% LTV mortgage in November 2022 was 6.59%, more than double the rate seen in January 2020. As of May 2023, this figure fell to 5.71%.
Can you get a mortgage with 5% deposit?
Although this level of lending became sparse during Covid, the majority of lenders now offer 95% LTV lending. This can be particularly appealing to first-time buyers due to the lower deposit requirement.
However, remember to look at current mortgage rates for higher deposit options, as they will usually save you more in the long term.
Best 95% LTV mortgage rates
This table shows some of the best fixed-rate mortgage deals currently available at 95% LTV. LTV is the amount you borrow compared to the value of the property. These initial rates are what you pay during the introductory deal period - in this case for two year fixed rate or five year fixed rate mortgage periods.
The Annual Percentage Rate of Change (APRC) - shown after the initial rates - can be useful when comparing the overall cost of different mortgage deals. It takes fees and the lender's standard variable rate (SVR) into account. But bear in mind that many people choose remortgage onto another deal before they fall onto the SVR.
- 2 years
- Fixed rate
- £ 250 cashback
- Monthly repayment£ 1,587.67
- Loan to value95 %
- Initial interest rate5.22 %
- Variable rate8.49 %
- APRC8.2%
- Product fees£ 1,099
Representative example:Repayment mortgage of £266,000.00 over 25 years, representative APRC 8.2%. Repayments: 26 months of £1,587.67 at 5.22% (fixed), then 274 months of £2,100.71 at 8.49% (variable). Total amount payable £616,873.96. Early repayment charges apply until 31-Dec-2026. Arrangement, mortgage discharge, valuation and CHAPS fees total £1099. Legal fees £161.27.
- 2 years
- Fixed rate
- Monthly repayment£ 1,592.37
- Loan to value95 %
- Initial interest rate5.25 %
- Variable rate7.24 %
- APRC7.1%
- Product fees£ 1,132
Representative example:Repayment mortgage of £266,000.00 over 25 years, representative APRC 7.1%. Repayments: 28 months of £1,592.37 at 5.25% (fixed), then 272 months of £1,895.71 at 7.24% (variable). Total amount payable £560,219.48. Early repayment charges apply until 28-Feb-2027. Arrangement, mortgage discharge, valuation and CHAPS fees total £1132. Legal fees £117.43.
- 2 years
- Fixed rate
- £ 250 cashback
- Monthly repayment£ 1,606.51
- Loan to value95 %
- Initial interest rate5.34 %
- Variable rate8.54 %
- APRC7.7%
- Product fees£ 140
Representative example:Repayment mortgage of £266,000.00 over 25 years, representative APRC 7.7%. Repayments: 24 months of £1,606.51 at 5.34% (fixed), then 276 months of £2,083.27 at 8.54% (variable). Total amount payable £603,283.80. Early repayment charges apply until 2 years. Arrangement, mortgage discharge, valuation and CHAPS fees total £140. Legal fees £105.
- 2 years
- Fixed rate
- Monthly repayment£ 1,608.15
- Loan to value95 %
- Initial interest rate5.34 %
- Variable rate8.99 %
- APRC8.7%
- Product fees£ 1,323
Representative example:Repayment mortgage of £266,000.00 over 25 years, representative APRC 8.7%. Repayments: 26 months of £1,608.15 at 5.34% (fixed), then 274 months of £2,188.47 at 8.99% (variable). Total amount payable £641,452.68. Early repayment charges apply until 2 years. Arrangement, mortgage discharge, valuation and CHAPS fees total £1323.
The above rates are provided by Mojo Mortgages and updated every 12 hours. THEY MAY NOT BE AVAILABLE WHEN YOU'RE READY TO SUBMIT AN APPLICATION.
Types of 95% mortgages
First time buyer
95% LTV is a popular option for many first-time buyer mortgages, as it can help them to get on the property ladder faster - saving a larger deposit might delay this by a few years.
However, it's also worth considering that a larger deposit (and therefore lower LTV) will give you access to more competitive mortgage rates.
Moving home
If you're moving home and have built up 5% equity in your existing property, you might opt for a 95% mortgage. When you move home, it's possible to use your existing equity as a deposit to buy a new one.
Most people upsize when they buy a second home, which can mean increasing the size of your mortgage. This will be easier with greater than 5% equity, however, you could also add a cash deposit if you don't want to delay moving until your equity has grown.
Remortgage
It's not particularly easy to get a 95% LTV remortgage deal. Most lenders would likely expect you to build up more equity before you consider remortgaging, if you already own a property.
You may be better aiming to remortgage at a higher LTV or speaking to a mortgage broker who can advise on the best remortgage rates available to you.
Why does loan-to-value matter?
The loan-to-value ratio is a huge factor for lenders to decide how much they can lend you, and at what rate.
If you borrow more in relation to your home's value, then you're a higher risk for the lender, as there’s more for you to pay back.
UK mortgage statistics show that over 110,000 residental mortgage-holders are in some form of arrears, meaning they're behind on monthly mortgage payments. Always aim for a mortgage you can afford comfortably, accounting for any potential rises in interest rates.
That also means there’s more risk for you, the borrower. The more you borrow, the more you have to pay back and, crucially, the more interest you will eventually pay over the lifetime of the mortgage deal.
You're also more likely to fall into negative equity more easily, the greater percentage of the property value you owe. This is because if the property prices suddenly fell, it would be a shorter fall until you owed more than your home's new value.
Am I eligible for a 95% mortgage?
Eligibility for 95% mortgage deals is similar to lower LTV mortgages, with the same affordability criteria applied that lenders will be looking for so that they can be confident in your ability to make repayments.
A prospective lender will assess your income, as well as reviewing your expenses and any debt you owe before deciding whether or not to offer you a mortgage. Your credit history will affect your ability to borrow too. The best 95% LTV mortgage rates will be available to those with a good credit score and stable income.
Government 95% mortgage guarantee scheme
Due to the increased risks for lenders, during the COVID-19 pandemic, 95% LTV mortgages weren't generally available. However, 95% mortgages saw a resurgence in April 2021 due to the government launch of a new 95% mortgage guarantee scheme. The intention of the scheme was to increase the availability of these mortgages by making lender's more confident in their lending.
Under the scheme the government guarantees any amount borrowed over 80% to reduce the risk for lenders and encourage banks to offer more high LTV mortgages.
The scheme ends in June 2025, however, as more lenders have returned to offering 95% mortgages generally, this should not mean that availability is reduced after that.
How much can I borrow with a 95% mortgage?
How much you can borrow from a mortgage lender depends on your individual affordability, and a broker can help you to access current mortgage rates.
A lender will generally base your borrowing on your annual income – you can normally borrow around 4 - 4.5 times this figure.
However, they will also look at your outgoings to determine whether you can afford the repayments. That's why it's often a good idea to assess your spending habits three to six months before applying for a new mortgage deal.
Lenders also review your credit history to check whether you can reliably manage debt. It's worth checking your credit score before you apply and trying to resolve any issues, including errors on your report.
If your score is lower than you expected, you can also take steps to build it, like using a credit card for small payments and always repaying on time, or registering on the electoral roll (if you haven't already) as lenders see this as a sign of reliability.
While a 95% mortgage deal can get you on the property ladder faster, a larger deposit should open up access to better rates. You'll also be less vulnerable to the potential of negative equity”Kellie Steed, Mortgage Content Writer
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95% LTV Mortgages FAQs
Will the interest rate on a 95% ltv mortgage be higher?
Yes, it's highly likely that it will be higher than someone borrowing at a lower LTV. This is because the lender considers the greater the LTV the greater the risk to them. They, therefore, charge a higher rate to compensate this.
Mortgage rates tend to reduce in increments of around 5%, so if you could offer a 10% deposit, rather than 5%, this would be likely to make a difference to the mortgage rates available to you.
Should I save more and avoid getting a 95% LTV mortgage?
It really depends on your priorities. If you're looking to move as soon as you can, you may feel that paying a higher rate of interest is warranted - especially if house prices are expected to rise.
Of course, if you're renting whilst you save, it's also worth considering how much this inhibits your ability to save a larger deposit - and how that rent may be better spent paying off your own home.
If your main priority is to pay the least interest possible over the duration of your mortgage term, however, it's probably best to save as much as possible before you start the home buying journey. Those with a larger deposit will almost always benefit from the best mortgage rates.
Are 95% mortgages only available to first-time buyers?
These mortgage deals are not just available to first-time buyers, it's also possible to get a 95% TV mortgage when you move to a new property, or remortgage, however, there are likely to be less options available at this high of a loan to value.
What is a higher lending charge?
Not all lenders impose a higher lending charge, but some add a fee of around 1.5% of the value of the mortgage if you're borrowing more than 90% LTV.
This is another good reason to save up a deposit greater than 10%, if possible.
What are the advantages and disadvantages of 95% mortgages?
No matter what LTV you borrow at, there are both advantages and disadvantages to taking out a mortgage. Whether and how they apply you to you depends on your individual circumstances.
An advantage of a 95% mortgage is that it can help you get onto the property ladder sooner if you're looking for a first-time buyer deal, but at the same time, your interest rates will be higher at this level of borrowing, you'll repay more in the long run, and you have more chance of falling into negative equity than id you borrowed less.
So it depends on how desperate you are to buy a property, remortgage, or move to a new one. Generally saving a larger deposit is preferable, but if this is not going to be an option for you, then there are plenty of 95% LTV deals available.
Can you get a 95% mortgage on a new build?
It's possible, but most lenders prefer a at least 15% deposit for a new build home purchase. This is because new builds notoriously lose value quicker than non-new build properties, as the 'new' premium only applies on the first purchase.
Can I get a 5% deposit mortgage?
Yes, you can get a mortgage with 5% deposit. In fact, there are lots of lenders on the market offering 95% mortgage deals. It's even possible to find a 95% mortgage for a first-time buyer.
However, remember the higher the LTV, the higher the mortgage interest rates generally are.
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YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
Uswitch makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.