<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/95-ltv-mortgages\/5-deposit-government-mortgage-schemes\/">Government schemes<\/a> and specialist mortgage products are helping people get onto the property ladder with just 5% deposit to their name, but many who are borrowing under these circumstances are worried about being hit with high interest rates.\r\n\r\nBut the good news is that, with the right advice, it\u2019s still very much possible to get a favourable deal on a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/95-ltv-mortgages\/">95% loan-to-value (LTV) or 5% deposit mortgage<\/a>, and this guide will tell you how to find it, as well as give you an idea of the rates on offer.\r\n\r\nThe following topics are covered below\u2026\r\n<ul>\r\n \t<li><a href="#higher-rates">Do 95% LTV mortgages always come with higher rates?<\/a><\/li>\r\n \t<li><a href="#factors">Factors that affect interest rates<\/a><\/li>\r\n \t<li><a href="#best-rates">How to get the best rates<\/a><\/li>\r\n \t<li><a href="#compare-deals">How to compare deals<\/a><\/li>\r\n \t<li><a href="#expert">Speak to an expert<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="higher-rates">Do 95% loan-to-value mortgages come with higher rates?<\/h2>\r\nYes, this is usually the case. Low-deposit mortgages are generally considered to be higher risk by most mortgage lenders, so they up their rates on these products to safeguard themselves. Given that 5% deposit is the lowest you\u2019d be approved with under most circumstances, 95% LTV mortgages tend to come with the highest rates on the market.\r\n\r\nResearch carried out by Moneyfacts.co.uk, found that the average interest rate on a 95% LTV mortgage with a two-year fixed rate was 4.47% on 1st April 2021. This is compared to an average interest rate of 3.45% for 90% LTV products with the same fixed rate.\r\n\r\nThe same data suggests that the average interest rate for a 95% LTV mortgage with a five-year fixed rate in the UK was 4.32%, while its 90% LTV counterpart was at 3.64%.\r\n<h3>Is this always the case with 5% deposit mortgage rates?<\/h3>\r\nNot exclusively. Keep in mind that 95% LTV mortgage deals aren\u2019t the only way to get a mortgage with 5% deposit. There are specialist products and government schemes that can help you get onto the property ladder with little deposit and more equity.\r\n\r\nFor example...<b><\/b>\r\n<ul>\r\n \t<li><b>Help to Buy: <\/b>Now exclusive to first-time buyers, the Help to Buy equity loan scheme can help you buy a house with 5% deposit by giving you access to a government loan worth 20% of the property\u2019s value (more than this in London). This means you\u2019d end up with more equity, potentially superior rates, but an extra debt to settle. You can read more about this in our complete <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/help-to-buy-mortgages\/">guide to Help to Buy mortgages<\/a>.<\/li>\r\n \t<li><b>Guarantor mortgages: <\/b>If you have a 5% deposit made up of your own funds and a family member who\u2019s willing to support you financially, a guarantor mortgage could help you get onto the property ladder with more equity and more favourable rates, depending on your guarantor\u2019s creditworthiness and the value of the assets they\u2019re securing your mortgage against. Read more in our <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/guarantor-mortgages\/">guarantor mortgages guide<\/a>.<\/li>\r\n<\/ul>\r\nAlthough there are fallback options for customers with 5% mortgage deposits, bear in mind that not all 95% LTV mortgages come with sky-high interest rates. While the rates on these products can be higher on average, it may be possible to secure a deal with a lower-than-average interest rate. Jump ahead to the next section to find out more about the factors which affect the mortgage interest rate you\u2019ll ultimately end up with.\r\n<h2 id="factors">Factors that affect interest rates<\/h2>\r\nThe exact amount you\u2019d pay in interest on a 95% LTV or 5% deposit mortgage isn\u2019t necessarily a fixed amount. Your mortgage lender will work out what kind of rates and deals you qualify for based on your creditworthiness and the strength of your application.\r\n\r\nThey will calculate this based on the following factors\u2026<b><\/b>\r\n<ul>\r\n \t<li><b>Your credit report: <\/b>Clean credit can help you get the best rates available on a 95% LTV mortgage. Having <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/bad-credit-mortgages\/how-to-get-a-mortgage-with-bad-credit\/">bad credit<\/a> of any kind often means having to seek professional advice before applying for a mortgage, especially if you only have 5% deposit.<\/li>\r\n \t<li><b>Income: <\/b>The more you have, the better. Some lenders prefer customers in full-time employment, and will expect you to be able to prove your income with 2-3 years\u2019 worth of accounts if you\u2019re <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/self-employed-mortgages\/">self-employed<\/a>. Specialist advice is recommended if you\u2019re self-employed with less accounts than that or have complex income.<\/li>\r\n \t<li><b>Outgoings: <\/b>Having significant outgoings may impact affordability. If your <a href="http:\/\/onlinemortgageadvisor.co.uk\/mortgage-affordability\/debt-to-income-ratio\/">debt-to-income ratio<\/a> is high, this might limit the number of approachable lenders.<\/li>\r\n \t<li><b>Age: <\/b>It can be more difficult to get the best interest rates if you\u2019re approaching 75 or if the mortgage term runs into your retirement years. This usually calls for expert advice from a mortgage broker who specialises in <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/mortgages-for-pensioners\/">later-life lending<\/a>.<\/li>\r\n \t<li><b>Property type: <\/b>It can be more difficult to get the best rates on a \u2018non-standard\u2019 <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/property-types\/">property<\/a>, even if you have more than 5% deposit. This includes anything that isn\u2019t made from bricks and mortar, listed buildings, high-rise properties and more.<\/li>\r\n<\/ul>\r\n<h2 id="best-rates">How to find the best rates and deals on 5% deposit mortgages<\/h2>\r\nGetting the best rates and deals on a 5% deposit mortgage comes down to two things: meeting the eligibility requirements at as many mortgage lenders as possible, and having access to every product available in this corner of the market.\r\n\r\nYou can read about some of the factors that determine your eligibility in the previous section, but market access is exactly the kind of thing we can help you with. We can match you with a mortgage broker who specialises in arranging 95% LTV and 5% deposit mortgages. This will be an advisor who has a deep working relationship with all of the lenders who offer them and a strong track record of arranging them for customers like you.\r\n\r\nApplying through a mortgage broker who helps customers with low deposits every day is by far the best way to secure the most favourable rates and deals available. With their guidance, you can rest assured that you will be introduced to the right lender first time.\r\n\r\nApproaching the wrong lender is one of the most common reasons people end up paying over the odds in interest. If you were to go it alone and end up with a mortgage provider who doesn\u2019t cater for low-deposit customers particularly well, you might end up having to settle for an unsuitable mortgage deal or be turned away altogether.\r\n\r\nBeing declined for a mortgage can be just as damaging to your prospects, as this can impact your credit report and make securing the best rates with the next lender even more unlikely. But if you apply through the right broker, this is something you won\u2019t have to worry about.\r\n<h3>Mortgage broker-exclusive deals<\/h3>\r\nAnother reason to use our broker service if you\u2019re looking for the best 5% deposit or 95% LTV mortgage deals is because the advisors in our network often have access to exclusive deals that aren\u2019t available to the general public. In fact, many of the 95% LTV mortgage products that were reintroduced to the market in 2021 are broker-exclusive deals.\r\n\r\nGiven that 95% LTV mortgages are still relatively scarce, the extra product choice a broker can offer you is essential if you\u2019re hoping to lock down the best interest rate.\r\n<h3>What\u2019s the cheapest 95% LTV mortgage available?<\/h3>\r\nThere\u2019s no definitive answer we can give here. If we were to cite the \u201ccheapest\u201d interest rate available on a 95% LTV mortgage right now, it could be outdated within minutes since mortgage interest rates are forever in flux and can shift at any time. Also keep in mind that the lowest interest rate for you isn\u2019t necessarily the same as it is for the person next door, as the products and deals that you qualify for might vary, based on your eligibility.\r\n\r\nAnother relevant point here is that the \u201ccheapest\u201d 95% loan-to-value mortgage product and the one with the lowest interest rate might not be one and the same. There are also product fees to factor into the total cost. There\u2019s no point taking out a deal with a low interest rate if it means paying well over the odds in up-front fees and ending up out of pocket overall.\r\n\r\nWhat we can tell you is how to make sure you\u2019re getting the most cost-effective deal to you: speak to a broker who specialises in arranging 5% deposit mortgages. They will do all of the legwork rounding up the best products that you qualify for and work out the overall cost of each of them, so you can make an informed decision about which one is for you.\r\n<h2 id="compare-deals">How to compare 95% LTV mortgages<\/h2>\r\nOne of the most common mistakes people make when searching for the best 95% LTV or 5% deposit mortgage deals is comparing the market the wrong way. You won\u2019t get a full picture of the products on offer by carrying out a quick Google search, or even a thorough one.\r\n\r\nInternet rates tables and other online tools are rarely whole-of-market, they aren\u2019t bespoke to you and your needs, and often give prominent placement to sponsored products. They\u2019re fine for a rough idea of what\u2019s available, but if you\u2019re serious about landing the best rates, speaking to the right mortgage broker is a better way to go about things.\r\n\r\nThe brokers we work with not only have access to the entire 95% LTV market, they can give you bespoke product advice and have deep working relationships with the lenders who offer these products, which sometimes means they can negotiate an exclusive deal for you.\r\n\r\nWith the help of a broker from our network, you can rest assured that you\u2019ll get a full comparison of the entire market, including exclusive 5% deposit mortgage deals that aren\u2019t available to the public. Your broker can go through every product that you qualify with you and help you make an informed decision about which one to choose.\r\n\r\nThey will compare the top 95% LTV and 5% deposit mortgages available, including...\r\n<ul>\r\n \t<li>2021 <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/blog\/mortgage-guarantee-scheme-2021-everything-you-need-to-know\/">mortgage guarantee scheme<\/a> deals<\/li>\r\n \t<li>New 95% LTV mortgages (products relaunched since the COVID-19 pandemic)<\/li>\r\n \t<li>Help to Buy equity loan mortgages<\/li>\r\n \t<li>Guarantor mortgages (if applicable)<\/li>\r\n \t<li>5% deposit mortgages through other viable government schemes<\/li>\r\n<\/ul>\r\n<h2 id="expert">Speak to an expert<\/h2>\r\nWe offer a free broker-matching service that can pair you up with the perfect advisor for your needs and circumstances. This will be someone with exactly the right knowledge and experience you need, as well as a strong track record helping people with 5% deposit.\r\n\r\nCall 0808 189 2301 or <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-shared-ownership-expert">make an enquiry<\/a> and we\u2019ll set up a free, no-obligation chat between you and your perfect mortgage broker today.