95% Loan-To-Value Mortgages

Interested in getting 95% LTV mortgages? Learn all the essentials with guidance from a specialised broker

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Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

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.

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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:

Salary 3x 4x 5x
£20,000 £60,000 £80,000 £100,000
£25,000 £75,000 £100,000 £125,000
£30,000 £90,000 £120,000 £150,000
£35,000 £105,000 £140,000 £175,000
£45,000 £135,000 £180,000 £225,000
£50,000 £150,000 £200,000 £250,000

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:

Gather your documents

Before you start approaching lenders, it’s worth having to hand all your relevant details. You’ll need a photo ID, proof of address, 3 months’ payslips and bank statements (or your company accounts if you’re self-employed). Along with these details for the mortgage application, think about potential properties and how much you’d like to borrow.

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.

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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.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated May 2024

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:

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.

Advantages

  • A smaller deposit means you can save up and buy a home faster than if you had to spend more time saving for a bigger deposit.
  • If you deal with the right lenders, it’s still possible to get competitive rates for a 95% loan-to-value mortgage.
  • It can be more affordable than renting, and a cheap way to get on the property ladder; especially helpful if you’re a first-time buyer and live in an area with rapidly rising house prices.
  • Certain lenders will still let you access higher salary multiples, meaning you can borrow more.
  • Once you own the property, you’ll start building equity in the home as you pay off the mortgage.

Disadvantages

  • Only a small number of high street banks and lenders offer 95% LTV mortgages. As a result you may only be able to borrow a smaller amount than you need.
  • You’ll only own a small amount of equity, which could turn negative if house prices drop.
  • If you don’t deal with the right lender, you may have to pay a higher lending charge (HLC) which they use to take out insurance against your loan.
  • The type of property you want to buy (e.g. new build, flat, apartment, bungalow etc.) can impact the maximum LTV limit of some lenders.
  • Because you’re borrowing more, you’ll likely pay back more money over the mortgage term.

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.

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FAQs

It’s unlikely. The maximum LTV for an interest-only mortgage is typically 85%. But, if you discuss your details with a skilled mortgage advisor, they can explore alternative ways for you to still get a 95% LTV mortgage on an interest-only basis.

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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 Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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