Local expert advice in Darlington

Everything you need to know about 95% mortgages

If you’ve been trying to buy your next home but haven’t yet saved up a big enough deposit, you could be eligible to apply for a 95% loan to value (LTV) mortgage. This means that you may be able to buy a home with just a 5% deposit.

The 95% mortgage scheme has officially launched from 19^th April 2021. The scheme is being offered by a number of high street lenders across the country including Lloyds, Santander, Barclays, HSBC and NatWest.

Are you interested in a 95% mortgage? Find a mortgage today using our handy online mortgage finder. We search 12,000 mortgages from over 90 lenders, so we’ll always find the right deal for your circumstances.

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 have introduced a new scheme to incentivise lenders to reintroduce 95% mortgage deals from 19^th April 2021. These types of mortgages have been available previously but the number of 95% mortgage products has largely decreased during the pandemic.

The new mortgage guarantee scheme will see the UK Government act as a safety net for lenders. In the worst case scenario, if or where the property is repossessed and sold at a loss, the Government will take on some of the losses incurred by the lender. In return, lenders will have 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?

There’s a few things you should know about the new scheme:

• It will launch from 19^th April 2021
• 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 (i.e., 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 require a 5% deposit for a 95% LTV mortgage, many prospective homebuyers could find they have 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. If you still think you might not have enough, take a look at our article on buying a home with a small deposit.

Would you like to find out whether a 95% mortgage product is right for you? Or maybe just fancy a chat to discuss your options? We’re always here to help. Feel free to get in touch and contact us today.