95% LTV Mortgages

For prospective homeowners with small deposits, there are 95% LTV mortgages, but what are they, how do you get one, and what rates should you expect? Here, you can find all you need to know about 95% LTV mortgage deals.

What is a 95% LTV mortgage?

A 95% LTV mortgage is a mortgage with a loan-to-value ratio of 95%. You would need this type of home finance if you are buying a property with 5% of the purchase price to pay upfront as a deposit and using a mortgage to cover the remainder of the cost.

A mortgage with such a high loan-to-value ratio would be considered a ‘low deposit mortgage’ as many mortgage lenders ask for 10% deposit as the bare minimum.

Because of the risk associated with low deposit lending, 95% LTV mortgages tend to have some of the highest interest rates on the market, but can be a viable option for some first-time buyers and other demographics who might struggle to raise 10% deposit.

Example: If you were buying a property with a purchase price of £200,000, with a deposit of £10,000 and a mortgage to cover the rest, your LTV ratio would be 95%.

Eligibility criteria

The eligibility criteria for a 95% mortgage is generally no different to mortgages with lower LTVs, but since there is added risk for the lender, some requirements can be more stringent.

Furthermore, many 5% deposit mortgages are exclusively offered through government schemes, and these schemes can have their own sets of restrictions.

The general criteria for 95% LTV mortgages is as follows:

• First-time buyer exclusivity: Not all 95% LTV mortgages are exclusive to first-time buyers, but many are, especially if you are using a government scheme.
• Property type/usage: Some 5% deposit mortgages are limited to new build properties and can only be used to purchase a primary residence.
• Property value caps: Some 95% LTV mortgage schemes have a cap on the maximum value your property can be. For example, with the Mortgage Guarantee Scheme, it is £600,000, but not all of these mortgages are offered through schemes.
• Credit history: It is possible to get a 5% deposit mortgage with some forms of bad credit, but certain lenders can be stringent about this because of the increased risk. With severe forms of bad credit such as bankruptcies and repossessions, your chances of approval may be slim until they have been fully discharged.

The other requirements for 5% deposit mortgages are no different to other types of residential mortgage. Your options might be restricted if you are self-employed with limited proof of income or purchasing a non-standard construction home - speak to a broker if you are concerned about not fitting the lending criteria for the mortgage you need.

Schemes for borrowers with 5% deposit

Not all 95% LTV mortgages are offered through government and housebuilder schemes. Some lenders offer them as part of their standard product range, but there are initiatives out there that were specially designed to help people with low deposit buy a home.

The main 95% LTV mortgage schemes available in the UK right now are as follows:

The Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme is aimed at first-time buyers and homemovers with 5-9% deposit, so 95% LTV deals are readily available through it. This is not a scheme you apply for directly, but one lenders enrol themselves in to increase their high LTV offerings.

The criteria for a Mortgage Guarantee Scheme deal can be found below:

• Property purchase price must be £600k or less
• Property must be a primary residence (no second home or buy-to-lets)
• Not available for interest-only mortgages
• Borrowers must be individuals, not a company
• Only available through participating lenders
• Available until 30th June 2025

Mortgage Guarantee Scheme deals are largely the same as other 95% LTV mortgage products, so it’s advisable to speak to a broker before you apply for one so they can compare and contrast what is available across the whole of the market for you.

First Homes Scheme

The First Homes Scheme provides 95% LTV mortgages for first-time buyers as well as a discount on the property’s market value of anywhere between 30% and 50%.

The requirements for this scheme are as follows:

• For new build houses and flats only
• Key workers, including NHS and emergency service staff, take priority
• Property price caps of £250k outside London and £420k in London
• Total household income cannot exceed £80k (or £90 in London)
• People buying in their local area are prioritised

Deposit Unlock

Deposit Unlock scheme is another 95% LTV mortgage scheme, this one aimed at first-time buyers and homemovers, who are purchasing from a participating housebuilder.

Requirements for the scheme are as follows:

• New build properties only
• Maximum mortgage available is £750k
• Only available through Nationwide, Accord and Newcastle BS
• Mortgages must be arranged via a broker
• Limited to participating housebuilders

Other schemes

It is possible to get a 5% deposit mortgage through other government mortgage schemes, including Right to Buy and Shared Ownership. These initiatives are not exclusively for low deposit mortgages, but the deposit requirements for people using them are flexible.

You can read more about these schemes through the links below:

• Right to Buy
• Shared Ownership

How to compare 95% LTV mortgage deals

There are now a wide range of options out there for prospective mortgage borrowers with 5% deposit. You can compare the latest 95% LTV mortgage rates from lenders across the market for free on Teito - or have one of our brokers do it for you - below:

Find a better 95% LTV mortgage deal on Teito

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Available lenders and interest rates

There is now a wide range of lenders offering 95% LTV mortgages. The table below offers a snapshot of the rates and deals available at the time of writing (June 2024).

Please note that the above is merely a handful of the rates and deals available. This information was accurate at the time of writing but is subject to change.

Advantages and disadvantages

The table below offers an overview of the pros and cons of 95% LTV mortgages.

Calculate your mortgage repayments

To calculate your repayments on your 95% LTV mortgage, first deduct your 5% deposit from the property value to work out the size of the mortgage you need. Next, enter that amount into our calculator below along with a rate, term and repayment type to get fast results.

Why choose Teito for your mortgage needs?

You can compare rates and deals for 95% LTV mortgages from lenders across the market for free on Teito. When you source a mortgage with us, you can also take advantage of a free, no-obligation chat with a mortgage broker who can provide impartial advice.

Here are just some of the reasons why people choose Teito for their mortgage needs:

• You can access 95% LTV mortgage rates in seconds
• Our brokers know the ideal lenders for 5% deposit mortgages
• We are 5-star rated on leading review websites
• You can secure an agreement in principle in minutes

Ready to compare rates and deals and speak to a mortgage broker? Get started here.