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Key things to know about 95% LTV Mortgages

95% mortgage process

Taking out a 95% mortgage means that you’ll put down 5% of the property value as a deposit, with the remaining 95% taken out as a loan. For example, if you’re buying a property with a value of £250,000, you would need £12,500 for your deposit. You would then get a mortgage for the remaining £237,500.

If this sounds like the right type of mortgage for you, you can use our Mortgage Finder to find 95% mortgage deals you might qualify for. Just tell us about your circumstances and what you’re looking for, and we’ll search the market to find the best deals for you.

95% mortgage eligibility criteria

As with any type of mortgage, 95% mortgage lenders are looking to assess your affordability. That means they want to know not just about your income but also how you spend your money, so you should be prepared to share your bank statements and details of any debts and credit cards. However, if you have a good credit record and can prove to lenders that you’re able to afford your mortgage payments, both now and if interest rates rise in future, you have a good chance of being offered a competitive 95% mortgage deal.

If you’re applying for the Government’s 95% mortgages scheme, there are some eligibility criteria you must meet:

  • Your property must be valued at no more than £600,000
  • Your property should not be a new build
  • You must be applying for a residential mortgage. You cannot use this scheme for a 95% Buy to Let mortgage, or to buy a second home.
  • It must be a repayment mortgage rather than an interest-only one
  • You cannot take out any additional borrowing on your mortgage for the next seven years

Finding the best 95% LTV mortgage deal

Before you apply for your mortgage, it’s a smart idea to make sure your credit rating is good and there are no errors on your report. This can be done for free via any of the big credit reference agencies such as Experian, Equifax and Clearscore, and ensures that you can correct any omissions or errors which may cause issues with your mortgage application.

Although there are some great deals out there for those with smaller deposits the interest rates on 95% mortgages do tend to be higher. So if you can afford to put down a bigger deposit, you’ll nearly always have a broader range of mortgage deals to choose from at lower rates.

However, if you’re ready to go ahead and apply for a 95% mortgage, we can help you to find the best deals on the market. We’ll search the market to find the right mortgage to suit your circumstances, offering free advice at every step of the way.

95% LTV remortgage deals

One of the downsides of a 95% mortgage is that, although it can help you to get onto the property ladder, it can be difficult to remortgage your home in the future as you’ll only have a small amount of equity in your home. However, there are 95% remortgage deals out there.

Whether you originally had a 95% mortgage and need the same again or are looking for a 95% remortgage to free up finances to renovate your home, we can help you to find the right deal for you.

We have access to thousands of deals from over 90 lenders, so you can be safe in the knowledge we’ll find the best 95% LTV remortgage to suit your needs.

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95% LTV mortgages explained

When you take out a 95% mortgage, you’ll put down a deposit of 5% and borrow the remaining 95% of the property’s value. These are often called “95% LTV mortgages”, where LTV stands for “loan to value”. Simply put, this is the percentage of the mortgage in relation to the property value.

The main advantage of a 95% mortgage is that it can make it easier to buy a property with a smaller deposit, so they can be especially helpful for first time buyers.

It’s worth noting that if you can afford to put down a bigger deposit, you may be able to take out a 90% mortgage. This works in the same way, but with you putting down a 10% deposit and borrowing the remaining 90%. A wider range of mortgage deals at lower rates are often available if you have a bigger deposit.

If you chose to take out a 95% mortgage you should bear in mind that you are more exposed to being left in negative equity, where you owe more on your mortgage than the value of the property, if the property price goes down.

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Frequently asked questions

Can first time buyers get a 95% mortgage?

Because you only need to save up a small deposit, 95% mortgages are perfect for first time buyers. Opting for a 95% mortgage will enable you to get on the property ladder much faster than if you were to save up a bigger deposit for a standard mortgage. However, 95% mortgages aren’t only for new homeowners. They are open to all. But remember that you’ll get better rates if you’re able to put down a bigger deposit. Speak to us if you’re unsure about the best mortgage type for your circumstances.

How hard is it to get a 95% mortgage?

Provided you have a good credit record and can prove to lenders that you’re able to afford your mortgage payments both now and if interest rates rise in future, it should be possible to get a 95% mortgage.

Are 95% mortgages a good idea?

Often a 95% mortgage is the only way many first time buyers can get onto the property ladder, however as you’re putting down a relatively small deposit there’s a risk that if property prices fall you could end up in negative equity. It’s also important to remember that if you can afford to put down a bigger deposit, you’ll have a broader range of mortgage deals to choose from at lower rates.