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95% LTV Shared Ownership Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 7, 2021

One of the main benefits of Shared Ownership mortgages is that they’re often accessible to customers with limited income and modest deposits. In this guide, we’ve compiled need-to-know information for anyone applying through the scheme with 5% deposit to put down, including what your chances of approval will be and what kind of rates to expect.

Can you get a Shared Ownership mortgage with a 5% deposit?

Yes. This is possible as a fair number of Shared Ownership mortgage lenders are willing to consider applicants with 5% deposit. It can be more difficult that it would be if you had more deposit to put down, but with our help, a favourable deal could be possible.

One thing we need to clarify at this stage is that the deposit requirements for Shared Ownership mortgages are calculated based on the percentage of the property you’re buying, not its total value. For example, if you were buying a 25% share of a £200,000 home with a 5% deposit, you’d need to put down £2,500 and borrow £47,500. As is standard practise with Shared Ownership, you’d pay rent on the remaining percentage of the property.

Are Shared Ownership mortgages more difficult to get with 5% deposit?

It can be more difficult to get a Shared Ownership mortgage with 5% deposit than it would be with 10% or more. Your choice of approachable lenders will be fewer, and the less deposit you have, the higher the risk the lender will feel they’re taking on.

If a mortgage provider thinks that they’re taking on a big risk by lending to you, the chances of being hit with hefty interest rates are higher. This is even more likely to be the case if there are other risk factors involved in your application, and this includes things like…

  • Having bad credit
  • Being self-employed with limited accounts
  • Being over the age of 75
  • Having significant outgoings
  • A ‘non-standard’ deposit source

Applicants with only 5% deposit might struggle to find lending options if anything on the above list applies to them, since they’d fall into at least two niche categories. But the good news is that help is available. There are brokers who specialise in all of the above as well as low deposit mortgages, and they can help people get mortgages against the odds.

The key thing to remember is that not all Shared Ownership mortgage lenders consider the issues we’ve flagged up here to be deal-breakers, even if you only have 5% deposit to put down. So, it’s a case of finding the right lender, one who’s best positioned to offer a favourable 95% LTV deal to a customer with your profile, and a broker can do this for you.

Will I have to pay a higher interest rate?

Potentially. The amount of deposit you’re able to put down can have a direct impact on your interest rate by bringing down the overall risk. So, 5 percent Shared Ownership mortgages often come with higher interest rates than deals involving 10% deposit or more; but that isn’t to say getting favourable rates on a 95% LTV Shared Ownership mortgage is impossible.

Many factors affect interest rates, including your credit report, employment situation and your age, so it may be possible to secure relatively low interest rates on a 95% LTV Shared Ownership mortgage if there are no other risk factors involved, besides your low deposit. And if even if you have bad credit, limited income proof or another issue, the right mortgage broker might be able to help you find borrowing options through a specialist lender.

At the time of writing, it’s possible to get a 95% LTV Shared Ownership mortgage with an initial rates period of just under 2%, although interest rates of between 2.5% and 3% are more common. Keep in mind that these rates could change at any time, so your best bet is to speak to a mortgage broker to get the most up-to-date information.

Which Shared Ownership lenders offer 5% deposit mortgages?

Lenders including Skipton Building Society, Leeds Building Society, Buckinghamshire Building Society and Virgin Money offer 95% LTV Shared Ownership mortgages, but this is merely a handful of the mortgage providers who operate in this corner of the market.

The market is vast and you’re unlikely to find the right lender through a quick Google search or by poring over an online rates table. In any case, approaching a lending directly is not recommended as you will only have access to their products. Why limit yourself when there could be a more suitable deal available from another Shared Ownership lender?

This is where a specialist mortgage broker is worth their weight in gold. A broker who arranges 95% LTV Shared Ownership mortgages every day will know exactly which lender to introduce you to, so you can rest assured you’ll end up with the right one first time. Not only will this boost your chances of approval, it could save you time and money in the long run.

See our guide to Shared Ownership mortgage lenders for more information.

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Can you get a Shared Ownership mortgage with less than 5% deposit?

Yes. A small minority of mortgage lenders offer 100% LTV Shared Ownership mortgages for customers with no deposit at all. These are usually offered by specialist mortgage providers you won’t find on the high street, but the brokers we work with know who they are.

Interest rates can be higher for 100% LTV Shared Ownership mortgages and the lenders who offer them will likely have a stricter eligibility criteria. For instance, some will expect you to provide three years’ address history and evidence of 12 months’ continuous employment.

For more information see our guide to 100% LTV Shared Ownership mortgages.

Speak to a Shared Ownership mortgage expert

Applying for a Shared Ownership mortgage can be risky if you only have 5% deposit since the chances of rejection or getting unfavourable interest rates are higher than they would be if you had more than that. But there’s a way you can lower the risk and boost your chances of a positive outcome – speak to a broker who specialises in Shared Ownership mortgages.

The right mortgage advisor will know exactly how to make that 5% deposit of yours go as far as possible. They will search the market for the best deals that you qualify for, match you with your ideal lender and walk you through every step of your application.

We can help you find the right advisor through our free broker-matching service. It will take your needs and circumstances into account and pair you with a hand-picked expert who helps customers just like you get Shared Ownership mortgages every day.

Call 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat between you and your perfect Shared Ownership broker today.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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