95% mortgages
What is a 95% mortgage?
95% mortgages are repayment mortgages suitable for first-time buyers who are only able to make a small deposit. These mortgages usually come with higher interest rates depending on a variety of factors, including how much you earn, your credit history and whether you can provide a guarantor. Buyers can have the option of an initial five-year fixed rate.
Although those with a 35% to 40% deposit can get the best deals, with a 5% deposit there are mortgages available for residential properties of up to £600,000.
Can you get a 95% mortgage?
To get a 95% mortgage you usually need an excellent credit history and you will need to prove you can afford the mortgage repayments, even if the interest rates were to rise, by providing details of your income and outgoings.
Although the impact of coronavirus made it much more difficult to get a 95% mortgage, the government has launched a scheme that will run until December 2022 to encourage banks to offer these mortgages.
Frequently Asked Questions
A 95% mortgage isn’t necessarily exclusive to first time buyers, homemovers can also qualify. However, you will need to have your 5% deposit saved and be able to prove that you earn enough to afford your monthly repayments. Here is the eligibility criteria:
- The mortgage applied for must be between 91% and 95% of the property’s purchase price
- The property being purchased must be in the UK
- The mortgage has to be on a capital repayment basis
- The lender has to offer a five-year fixed rate option to clients (shorter fixed rates are also available)
- The mortgage must begin within the scheme dates – which is currently set to be in place until December 2022
To increase your chances of being approved you will want the appropriate salary and a good credit score. If you’re still unsure, get in touch with our team.
It is notoriously difficult to get a 95% mortgage for new build properties.
If you have your heart set on a new build property there are other options, Instead we would recommend getting in touch so we may assist you further.
With a 5% deposit, most mortgage lenders are offer 4.49x your annual salary however each lender is different.
It’s not uncommon for family members to offer to help you get on the ladder and mortgage providers are aware of this. A family is able to gift or loan you deposit funds, however if the deposit has been gifted you must prove that you won’t be require to pay it back.
Alternatively, family members may act as guarantors to your mortgage.
Yes! The 95% mortgage scheme began on the 19th April 2021.
The maximum purchase price in this scheme is £600,000, therefore, there is a limit to have much you can borrow (£570,000). However, we have seen lending limits of £500,000 become more common.
Many mortgage providers offer different limits, so it’s important that we navigate you through the process as easily as possible.
