Compare 95% mortgages

These 95% mortgages only need you to pay a 5% deposit, which could make it easier for you to get on the property ladder.

Get free mortgage advice from an expert broker

301 results found, sorted by lowest initial rate. How we order our comparisons. Commission earned affects the table's sort order.
Sort
Chorley Building Society 2 year discount for first time buyers
Maximum LTV
95%
Initial rate
2.39% for 2 years (2.85% discount on SVR)
Subsequent rate (SVR)
5.24% variable
Overall cost for comparison
4.9% APRC
Available via brokers only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Scheme fee£599 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.85% of amount paid, in the first two years

Other fees may apply.

Eligibility
Available in England
Broker Only
First Time Buyers Only
First Time Buyers
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Chorley Building Society 2 year discount for first time buyers
Maximum LTV
95%
Initial rate
2.39% for 2 years (2.85% discount on SVR)
Subsequent rate (SVR)
5.24% variable
Overall cost for comparison
4.9% APRC
Available via brokers only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Scheme fee£599 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.85% of amount paid, in the first two years

Other fees may apply.

Eligibility
Available in England
Broker Only
First Time Buyers Only
First Time Buyers
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Monmouthshire Building Society 2 year discount for existing borrowers
Maximum LTV
95%
Initial rate
2.59% for 2 years (2.15% discount on SVR)
Subsequent rate (SVR)
4.74% variable
Overall cost for comparison
4.5% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.00% of amount paid, in the first two years

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Wales
Existing Borrowers Only
Max age at application80 years
Max age at term end85 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Virgin Money 2 year fixed for existing borrowers
0330 057 1718
Maximum LTV
95%
Initial rate
2.65% fixed until 01 Feb 2024
Subsequent rate (SVR)
4.34% variable
Overall cost for comparison
4.0% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available via brokers only. This mortgage is available for new builds only on the Help to Buy Equity loan scheme. Available on repayment basis. For residential interest only and part and part loans there is a minimum combined gross income requirement of £75,000. Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, before 01 Feb 2024

Other fees may apply.

Eligibility
Available in England
Available in Scotland
Available in Wales
Broker Only
Existing Borrowers Only
Max age at application68 years
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed
Maximum LTV
95%
Initial rate
2.69% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.5% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking fee£999 with an option to add to the loan
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.69% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.7% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking fee£999 with an option to add to the loan
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed for first time buyers
Maximum LTV
95%
Initial rate
2.69% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.5% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking fee£999 with an option to add to the loan
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
First Time Buyers Only
First Time Buyers
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Monmouthshire Building Society 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.7% fixed for 2 years
Subsequent rate (SVR)
4.74% variable
Overall cost for comparison
4.4% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 3.00% of amount paid, in the first two years

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Wales
Existing Borrowers Only
Max age at application80 years
Max age at term end85 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Leeds Building Society 2 year fixed
Maximum LTV
95%
Initial rate
2.85% fixed until 31 Dec 2023
Subsequent rate (SVR)
5.29% variable
Overall cost for comparison
4.7% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 3.00% of amount paid, before 31 Dec 2022

- then 2.00% of amount paid, until 31 Dec 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
First Time Buyers
Max age at term end85 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Monmouthshire Building Society 5 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.85% fixed for 5 years
Subsequent rate (SVR)
4.74% variable
Overall cost for comparison
3.9% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 5.00% of amount paid, in the first year

- 4.00% of amount paid, in the second year

- 3.00% of amount paid, in the third year

- 2.00% of amount paid, between 36 and 60 months

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Wales
Existing Borrowers Only
Max age at application80 years
Max age at term end85 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Skipton 2 year fixed
Maximum LTV
95%
Initial rate
2.85% fixed until 30 Nov 2023
Subsequent rate (SVR)
4.64% variable
Overall cost for comparison
4.3% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion fee£495 with an option to add to the loan
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, before 30 Nov 2022

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Scotland
Available in Wales
First Time Buyers
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed
Maximum LTV
95%
Initial rate
2.89% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.5% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.89% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.5% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
HSBC 2 year fixed for first time buyers
Maximum LTV
95%
Initial rate
2.89% fixed until 30 Nov 2023
Subsequent rate (SVR)
3.54% variable
Overall cost for comparison
3.5% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, in the first year

- then 1.00% of amount paid, until 30 Nov 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
First Time Buyers Only
First Time Buyers
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed
Maximum LTV
95%
Initial rate
2.89% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£1,499 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.89% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.89% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
Available to existing borrowers moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£1,499 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 3 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.89% fixed for 3 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.5% APRC
This product is only available for product transfers with your existing lender and not available for purchasing a new property.
Available to existing borrowers not moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of the outstanding balance, in the first year

- 1.50% of the outstanding balance, in the second year

- 0.75% of the outstanding balance, in the third year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Newcastle Building Society 2 year fixed for first time buyers
Maximum LTV
95%
Initial rate
2.89% fixed until 31 Dec 2023
Subsequent rate (SVR)
3.96% variable
Overall cost for comparison
3.9% APRC
Available via brokers only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, before 31 Dec 2022

- then 1.00% of amount paid, until 31 Dec 2023

Other fees may apply.

Eligibility
Available in England
Available in Scotland
Available in Wales
Broker Only
First Time Buyers Only
First Time Buyers
Max age at term end80 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
The West Brom 2 year fixed
Maximum LTV
95%
Initial rate
2.89% fixed until 31 Dec 2023
Subsequent rate (SVR)
3.99% variable
Overall cost for comparison
3.9% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion fee£499 with an option to add to the loan
Product feeNo fee
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of amount paid, before 31 Dec 2022

- then 1.00% of amount paid, until 31 Dec 2023

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Wales
First Time Buyers
Max age at term end75 years
Minimum Age21 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed
Maximum LTV
95%
Initial rate
2.92% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.92% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
Available to existing borrowers moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 3 year fixed
Maximum LTV
95%
Initial rate
2.92% fixed for 3 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of the outstanding balance, in the first year

- 1.50% of the outstanding balance, in the second year

- 0.75% of the outstanding balance, in the third year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 3 year fixed for existing borrowers
Maximum LTV
95%
Initial rate
2.92% fixed for 3 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.5% APRC
Available to existing borrowers moving only.
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£999 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 2.00% of the outstanding balance, in the first year

- 1.50% of the outstanding balance, in the second year

- 0.75% of the outstanding balance, in the third year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
Existing Borrowers Only
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Accepted
Nationwide 2 year fixed cashback mortgage for first time buyers
Maximum LTV
95%
Initial rate
2.94% fixed for 2 years
Subsequent rate (SVR)
3.59% variable
Overall cost for comparison
3.6% APRC
More information
Application feeNo fee
Arrangement feeNo fee
Booking feeNo fee
Completion feeNo fee
Product fee£1,499 with an option to add to the loan
Additional information

Early repayment charge

If you pay all or part of your mortgage early you will be charged:

- 1.50% of the outstanding balance, in the first year

- 0.75% of the outstanding balance, in the second year

Other fees may apply.

Eligibility
Available Direct
Available in England
Available in Northern Ireland
Available in Scotland
Available in Wales
First Time Buyers Only
First Time Buyers
Max age at term end75 years
Minimum Age18 years
Permanent UK Resident
Self Employed Acceptedfalse

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Overall representative example

Based on borrowing£170,000 over 25 yearsThe overall cost of comparison3.65% APRC representative
Initial rate2.10% fixed for 2 years (24 instalments of £714.22pm)Subsequent rate (SVR)3.86% variable for the remaining 23 years (276 instalments of £874.63pm)
Lender fee£552Total amount payable£259,090.78

Last updated: 10 May, 2021

What is a 95% mortgage?

A 95% Loan to Value or 95% LTV mortgage lets you borrow 95% of the value of the property you're buying. The remaining 5% of the purchase price is made up of your deposit.

It is a popular option for first-time buyers who often aren't able to put down more than a 5% deposit. However, your choices will usually be more limited with a 95% mortgage, and interest rates will be higher.

In comparison, the most competitive mortgages tend to be reserved for those with a much higher deposit to put down - usually around 40%.

How do I get a 95% LTV mortgage?

To get a 95% LTV mortgage, you'll need to either save up a 5% deposit (if you're buying your first home) or use the equity in your existing property (if you're remortgaging or moving home).

The equity you have in your current property is the share of it that you already own.

So, for example, if you bought a house for £200,000 and had saved up £10,000 as a deposit (or had £10,000 as equity), your savings would cover 5% of the price. Your mortgage would cover £190,000, which means you'd need a 95% mortgage.

Some people also refer to 95% mortgages as '5% mortgages', but that term is incorrect. A 5% mortgage implies that you'd need to put in 95% of the purchase price as a deposit - which is a lot more money.

What is the mortgage guarantee scheme?

At the start of the Covid-19 pandemic, the majority of 95% mortgages were pulled from the market, making choices for first-time buyers far more limited. Fortunately, however, this could be changing thanks to the launch of a new government-backed mortgage guarantee scheme on 1 April 2021.

The scheme is designed to encourage lenders to offer 95% mortgages again, with the government offering a guarantee, usually of 15%, to compensate lenders if the borrower is unable to repay the mortgage.

The scheme runs until 31 December 2022, and mortgages must be for residential properties that cost £600,000 or less. Major lenders such as Santander, Barclays, Lloyds, NatWest and HSBC have already launched mortgages under the scheme, with more expected to follow suit.

How to choose the right 95% mortgage

To find the right 95% mortgage you'll need to compare your options from as many different 95% mortgage lenders as possible. The easiest way to do this is to use our comparison table above. It includes a whole of market view of 95% UK mortgage deals available.

Make sure you compare both the interest rate and fees that come with each 95% mortgage. You may find that a mortgage with a higher interest rate but lower fee works out cheaper overall, so do the maths carefully.

You can also click on 'check eligibility' at the side of each mortgage in the table to find out if you'll be eligible.

Can I borrow a 5% deposit?

Yes, you can choose to borrow the 5% deposit if you wish, but be aware that any borrowing will show up on your credit report.

Mortgage lenders will take into account any other borrowing when working the amount of mortgage repayments you can afford.

If you are borrowing your 5% deposit from a family member you will still have to declare this as a loan.

Here's how to decide what type of mortgage you should get.

What can 95% mortgages be used for?

You can use 95% mortgages if you're buying your first home, moving home or even remortgaging.

Buying your first home

Some 95% mortgages can be used to buy your first home. Because you only need a small deposit, mortgages like this can be a good option for first-time buyers.

However, keep in mind that 95% LTV mortgage rates won't be as good as rates on a mortgage with a lower LTV. Even if you can manage to save up a 10% deposit, rates for 90% LTV mortgages will be cheaper.

There are a few ways you can try to save a deposit for your first home. You can do all, or a mixture, of the following:

  • Using your existing savings

  • Saving money each month

  • Borrowing from your family or friends

  • Using money given to you as a gift or inheritance

  • Sticking to a monthly budget

  • Cutting back on your spending

  • Spending less on rent

  • Switching your energy bills

  • Choosing the right savings account.

If you are using money given as a gift, bear in mind you will need the person gifting you the deposit to declare this is a gift and not a loan. Inheritance tax rules mean that there is a chance you will end up with an inheritance tax bill.

Here's some more advice on how to save up a deposit.

Note too that even when you've saved your deposit of 5%, some mortgage lenders won't accept first-time buyers, so make sure you check before applying.

Here's how to find a mortgage to buy your first home and check you can afford it.

Moving home

If the outstanding balance on your mortgage is 95% of the cost of the new property you want to buy, you'll need a new 5% deposit mortgage.

For example, if you owe £190,000 on your current mortgage and want to buy a new house for £200,000, you'd need a 95% LTV remortgage. The £10,000 equity in your current home could be used as the 5% deposit on your new mortgage.

Remortgaging

If the outstanding balance on your mortgage is 95% of your home's value, you could get a new mortgage with an LTV of 95%.

The equity in your current home would be used as a 5% deposit on your new home.

Who can get 95 percent mortgages?

Lenders won't usually give you a 95% mortgage unless you've got an excellent credit history. Offering 95% mortgages is risky to lenders, so the more reliable you are as a borrower, the more likely you are to get accepted.

As with any mortgage, lenders will scrutinise your finances closely, including your income, debts and outgoings, before deciding whether you can afford a 95% mortgage and that they are happy to lend to you.

What to consider when choosing a 5 percent deposit mortgage

When you're choosing a 5 percent deposit mortgage, it's worth considering the following:

The interest rate

When you take out a mortgage with a 5% deposit, you'll pay a set amount of interest on your repayments. Whether this rate is fixed or variable can affect your monthly payments and how much you'll pay overall.

If you pay a fixed rate You agree to the interest for a set length of time, which means you know how much your monthly repayments will be.

If you pay a variable rate The interest tracks the Bank of England base rate and goes up or down in line with this. This means your monthly repayments can be higher or lower, depending on external economic factors.

The type of mortgage

You can get a repayment mortgage, which is more expensive each month but you are chipping away at the balance. This is the most common type of mortgage.

Or, you can get an interest only mortgage, which is where you just pay off the interest. An interest-only mortgage is cheaper each month, but you don't bring your balance down at all. You'll still owe the full value of the house when your fixed term ends. These are less common and are deemed as riskier by lenders.

The schemes available

As well as the mortgage guarantee scheme, there are a couple of other schemes that can help you buy a home with a small deposit if you're a first time buyer.

These include the Help to Buy Equity Loan scheme (for new-build properties in England only) and Shared Ownership. With Shared Ownership, you buy a share of the property and pay rent on the share that you don't own.

How much can I borrow through a 95% mortgage?

The amount you can borrow through a 95% mortgage - or any mortgage - depends on your personal situation. Lenders will look at:

  • Your salary

  • Your income

  • Your outgoings

  • Your credit history

Usually you'll be able to borrow around three or four times your salary when you get a 95 percent mortgage, UK wide. It might be a bit less than this if you're getting a mortgage with someone else and basing it on two incomes.

Remember that every mortgage lender has different criteria to help them decide how much they'll lend and who they'll lend to.

Are 95% mortgages best for first time buyers?

Providing you can afford the monthly mortgage repayment, a 95% mortgage can be a good option for first time buyers. However, saving as much of a deposit as possible will help lower your interest rate and reduce the amount you pay overall. Always try to choose a repayment mortgage if you can.

Are there any disadvantages with 95% mortgages?

Getting a 95% mortgage isn't risk free, unfortunately.

One of the biggest risks is getting into negative equity. If you had a 95% mortgage and the value of your home suddenly dropped, it could be worth less than what you owe on your mortgage. You'd suddenly be left paying interest on a loan that's bigger than what the property's currently worth.

The other thing to look out for is that 5% deposit mortgages don't usually offer the best mortgage interest rates. It's usually the case that the bigger the deposit you put in, the better the mortgage deal you're offered.

As with any mortgage, if you don't make the repayments, your home could be repossessed. So it's worth being aware of this risk if you're considering taking out any mortgage at all.