95% Loan-To-Value Mortgages

If you’ve been exploring affordable home ownership options, you may have come across 95% loan-to-value (LTV) mortgages. This essentially means borrowing the majority of a home’s market value and using just a 5% deposit.

This guide explains everything you need to know about 95% LTV borrowing. You’ll learn how to get a home loan with just a 5% deposit, the pros and cons of doing so, and where to find expert advice to help you secure competitive mortgage rates.

Keep reading for all the details or click on a link below to jump straight to a section…

Can you get a 95% LTV mortgage?

Yes, this is possible. But not every lender will be able to offer a 95% LTV loan. The exact path you need to follow will depend on your personal circumstances along with the specific property you’re looking to buy. You’ll have a number of potential options, but it’s crucial that you find the right one.

How much you could borrow

This will depend on the lender you use and how they calculate affordability. If you take a look at our mortgage affordability calculator, you can get an idea about how much you could borrow with a 95% loan-to-value mortgage. To give you a quick insight, here are some examples of borrowing limits based on various income multiples:

95% borrowing options

There are still some lenders able to provide a 95% LTV mortgage. Or, at least, there are some who could be flexible enough to set you up with an affordable arrangement that suits your circumstances.

You’ll still have a number of alternative ways to secure a low deposit mortgage, such as:

Government schemes

Although the deadline for Help to Buy has now passed, there are other potential 5% deposit government schemes available to prospective home buyers:

• Mortgage guarantee scheme: this was due to end in December 2022, but has been extended by a year until the end of December 2023. It’s only with participating lenders and for first-time buyers on houses worth up to £600,000. It provides lenders with a guarantee to be compensated for a portion of any losses in the event of repossession, which reduces their risk.
• Shared Ownership: with a shared ownership mortgage, you can buy between 10% and 75% of a house, paying the mortgage on a portion and rent on the rest. The major benefit is that by not purchasing the whole house from the outset, it can be much easier to put down a deposit that’s equal to 5% of the total market value.

Family mortgage products

There are also ways to use assistance from family and friends to help you get a 95 percent loan-to-value mortgage.

• Guarantor mortgages: also known as a family assist mortgage, this usually involves using a family member to act as a guarantor. Meaning they will make repayments if you cannot. This reduces the risk for the lender and can make a 95% LTV loan more realistic.
• Family offset mortgages: if you only have a small deposit, this type of finance allows relatives to support you in your home purchase. Your chosen family member puts savings into an account linked to the mortgage, and this figure is deducted from the loan, making 95% borrowing more achievable. Family springboard mortgages are a similar alternative with a different name.
• Joint mortgage: it can be possible to team up with friends or family to get the mortgage you need. Various lenders will have rules about who you can borrow with and whose income counts for affordability purposes. But, this can still be a useful way to reduce how much you’re personally borrowing, meaning a smaller deposit from you is needed.
• Gifted deposits: if you’re struggling to get hold of a large enough deposit, some lenders will allow gifted deposits from family (and sometimes friends or other third parties). Doing this means you could put down 5% and then get someone to gift the remainder.

How to get a 5% deposit mortgage

The exact process of securing a 95% LTV loan will depend on your individual circumstances and the specific property you’re looking to buy, but there are some universally helpful steps to follow. Here’s what you need to do to get a competitive mortgage deal with a high LTV and a low deposit:

Using the services of an experienced mortgage advisor is the best way to find a top mortgage with competitive rates, especially for 95% loan-to-value borrowing. If you’d like to be introduced to an expert low deposit mortgage broker for free, just make an enquiry.

Mortgage interest rates

Low-deposit mortgages are generally considered to be higher risk by most mortgage lenders, so they increase their rates on these products to safeguard themselves. Given that 5% deposit is the lowest you’d be approved with under most circumstances, 95% LTV mortgages tend to come with the highest rates on the market.

The table below provides an illustration of the mortgage rates currently available.

Please note that the above rates were accurate at the time of writing, but are subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

Available UK banks and lenders

The mortgage market changes on a regular basis, but here are a few examples of major banks and high-street lenders who currently offer 5% deposit mortgages:

• Barclays – has no application fees, but the 95% LTV product can’t be used for a new build, a second home, a buy-to-let (BTL), or an interest-only mortgage.
• Nationwide – you can borrow up to £500,000, but cannot get a 95% LTV mortgage if you’re self-employed, buying a flat, or purchasing a new build.
• Natwest – only available to first-time buyers or home movers and can’t be for a new-build property.

As you can see, most mainstream lenders have specific rules and criteria that you may not meet. If you speak to an experienced broker about your home ownership goals and financial situation, they can find you the right 95% LTV lender for your needs.

Are 95% LTV mortgages a good idea?

They can be. Whether this will be the right borrowing solution for you will depend on your circumstances. Buying a house with just a 5% deposit can make home ownership more realistic and affordable, but it’s not always the right solution for everyone. Below is an explanation of some of the main benefits and drawbacks to think about.

Refinancing a property with 95% LTV

If you only own 5% of your home, it can be difficult to remortgage. As you make repayments, you will hopefully increase the level of equity you own. But, if you want to refinance a 95% loan-to-value mortgage, it’s best done with the assistance of an expert mortgage broker, especially if you’re using a government scheme or an equity loan.

Using a broker who specialises in refinancing high LTV mortgages means they can take a look at your existing lender and compare your borrowing arrangement with the rest of the market. An experienced broker will also have existing relationships with lenders who are comfortable remortgaging under these circumstances, allowing you access to favourable rates and terms.

Get matched with a low deposit mortgage specialist

Finding the best 95% loan-to-value mortgage that suits your individual needs can be extremely challenging without the guidance of an expert mortgage broker.

We offer a free, broker-matching service. This means we’ll quickly assess your property needs and the size of your deposit, then pair you up with an advisor that suits your circumstances.

If you’d like to be introduced to a broker specialising in low deposits and high LTV mortgages, just call 0808 189 2301 or make an enquiry. We’ll arrange a free, no obligation chat between you and your ideal broker today.