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95% mortgages
A 95% loan-to-value mortgage allows you to borrow up to 95% of your property value, so you just need a 5% deposit.
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What is a 95% mortgage?
With a 95% mortgage, you can borrow 95% of the cost of the home you want to buy - also described as having a 95% loan-to-value (LTV) ratio. It's sometimes called a 5% deposit mortgage because you'll need to contribute 5% of the property's value as your deposit.
A 95% mortgage is typically the largest LTV that most mortgage lenders will lend at, although 100% mortgage products are available. It may also be possible to borrow more than 95% through a guarantor style mortgage.
How do 95% mortgages work?
You pay a deposit worth 5% of the property value and 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, and you can usually remortgage onto a new rate once each deal ends.
| Property value | Deposit amount (5% of property value) | Mortgage loan amount (95% of property value) |
|---|---|---|
| £100,000 | £5,000 | £95,000 |
| £150,000 | £7,500 | £142,500 |
| £200,000 | £10,000 | £190,000 |
| £250,000 | £12,500 | £237,500 |
| £300,000 | £15,000 | £285,000 |
Can I get a 5% deposit?
The majority of lenders offer 95% LTV mortgages, which 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.
Whether you are personally eligible for a 95% mortgage deal will depend on your own individual circumstances. Eligibility for 95% mortgage deals is similar to other lower LTV mortgages, with affordability and eligibility criteria applied so that lenders can be confident in your ability to make repayments. The best 95% LTV mortgage rates will be available to those with a good credit score and stable income.
How much can I borrow with a 95% mortgage?
The amount you can borrow will depend on your individual affordability. Lenders typically lend around 4 to 4.5 times your annual income, but they also assess your outgoings and credit history to ensure you can reliably manage 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. It's also worth checking your credit report before you apply and trying to resolve any issues.
What is the mortgage guarantee scheme?
The 95% mortgage guarantee scheme launched in April 2021. Under the scheme, the government guarantees the amount borrowed over 80%, which reduces the risk for lenders. The scheme encourages banks to offer more high LTV mortgage products.
The scheme ends in June 2025. While it has supported the availability of 95% mortgages, many lenders now offer 95% mortgage products generally. So the end of the guarantee scheme may not necessarily lead to a significant reduction in the availability of 95% mortgages.
Find out how much you could borrow
Wondering if a 95% mortgage could be a good option for you? Our broker partner, Mojo, offers free mortgage advice to help you find the right product for your circumstances.
Advantages of a 95% mortgage
You'll only need to save for 5% of the property's value
It could help you get onto the property ladder faster
There are a range of 95% mortgage products currently available on the market to compare, including deals from high street lenders (though the range of products may still be more limited compared to lower LTV options)
Disadvantages of a 95% mortgage
Your interest rates will likely be higher, meaning you'll pay more both monthly and over the life of the loan
You have more chance of falling into negative equity if the value of your home decreases
Lenders may have stricter eligibility criteria for 95% LTV mortgage products
Some lenders may charge a higher lending charge on mortgages with high LTV
Types of 95% mortgages
5% deposit 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, though there are likely to be less options available at this high of a loan to value.
First time buyer
95% LTV is a popular option for many first-time buyer mortgages, as it can help first-time buyers to get on the property ladder faster - saving a larger deposit could delay your home ownership goals by a few years.
However, it's also worth considering that a larger deposit (and therefore lower LTV) could 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 could opt for a 95% mortgage and use your existing equity as a deposit for your new home. Many people upsize when buying a second home, which can require a larger 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.
Compare 95% mortgage rates
Speak to our broker partner, Mojo, to discover your mortgage options and get a free mortgage in principle.
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.”Jason McDonald, Mortgage Expert
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95% LTV Mortgages FAQs
What type of interest rate will I get on a 95% LTV mortgage?
It's highly likely that you'll be offered higher interest rates 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.
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.
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.
Can you get a 95% mortgage on a new build?
It's possible, but most lenders prefer at least a 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.
You may also be able to access 5% deposit mortgages through the Deposit Unlock scheme, though this option is currently only available through participating developers and lenders.
What does 95% LTV mean and why does LTV matter?
A 95% LTV mortgage means you are borrowing 95% of the property's value, and you need to provide the remaining 5% as a deposit.
The loan-to-value ratio is a huge factor for lenders when deciding 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. That also means there’s more risk for you as 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. Always aim for a mortgage you can afford comfortably, accounting for any potential rises in interest rates.
You're also more likely to fall into negative equity more easily if you owe a greater percentage of the property value. This is because if the property prices suddenly dropped, it would be a shorter fall until you owed more than your home's new value.
Can I get a 95% buy-to-let mortgage?
Lenders typically require a much larger deposit for buy-to-let mortgages, usually around 25% of the property value. That's because they're seen as a higher risk by lenders. A mortgage broker can help you assess your options if you're looking to get a buy-to-let mortgage.
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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.
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