Everything you need to know about 95% mortgages
Everything you need to know about 95% mortgages
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 these mortgages now available?
The UK Government introduced a scheme in April 2021 to incentivise lenders to reintroduce 95% mortgage deals. These types of mortgages were available previously but the number of 95% mortgage products largely decreased during the pandemic.
The mortgage guarantee scheme will see the UK government act as a safety net for lenders. If a property is repossessed and sold at a loss, the Government will take on some of the losses incurred by the lender. In return, the lenders will have a 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?
A few things you should know about this scheme:
- 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 (for example you may only be offered a loan worth four times your annual household income.)
Can I now get a mortgage?
You might have guessed it, but this all depends on your individual circumstances and affordability, which can be assessed by an expert mortgage adviser. However, as you now only need a 5% deposit for a 95% LTV (Loan To Value) mortgage, many prospective homebuyers could now find themselves in a position to purchase their first home.
Let's say you were aiming to buy a home for £200,000 through a 90% LTV mortgage your deposit would have been £20,000.
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.
Can I now get a mortgage?
You might have guessed it, but this all depends on your individual circumstances and affordability, which can be assessed by an expert mortgage adviser. However, as you now only require a 5% deposit for a 95% LTV mortgage, many prospective homebuyers could find they have enough enough to buy their first property.
For example, let's say you were aiming to buy a home for £200,000 through a 90% LTV mortgage your deposit would have been £20,000.
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.
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Established in 2009 by Natasha Brown after 15 yrs in financial services. Her business is driven around providing a premier service to her clients. We offer advice on a comprehensive range of mortgages from across the market, but not deals that you can only obtain by going direct to the lender. Relationships with local Solicitors, Estate Agents and Accountants provide clients with a one stop service that is very well received.
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Because we play by the book we want to tell you that…
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 you pay will depend upon your circumstances.
A typical fee of £495 is payable on completion.