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What are 95% mortgages?

A 95% mortgage is a loan to purchase a property. 5% of the property price is made up of your deposit, and the remaining 95% makes up the mortgage loan.

The 95% is known as the loan-to-value (LTV) ratio. The higher the LTV, the higher the interest rates tend to be.

Most deals are repayment mortgages, which means you repay this loan plus interest over the course of your mortgage term. At the end of the term, you own the property outright.

Lenders normally cap the amount you can borrow at around 4.5 times your annual income.

So, even if you save up a deposit worth 5% of your dream home's price, you still need enough income to borrow the remaining 95%.

95% is usually the maximum LTV you can get for a mortgage. There are a few 100% mortgage (or no-deposit) deals on the market. But these normally require a family member to act as a guarantor or to put up their savings or house equity as a deposit.

95% mortgage guarantee scheme

This scheme aims to help people with smaller deposits, as low as 5%, to get onto the property ladder. It was introduced in the UK to address the challenge faced by many first-time buyers who struggled to afford the typically higher deposits required by lenders.

In this scheme, the government incentivises lenders by providing a guarantee for a portion of the mortgage (usually 95%). This reduces the risk for the lender in case the borrower can't make the repayments, making them more likely to offer mortgages with smaller deposits.

The mortgage guarantee scheme is available until the end of June 2025. But borrower's can only access this scheme if they meet the lender's criteria, and not all lenders participate in this scheme.

If you don't qualify, you may find that there are still many 95% mortgages available outside of the scheme as more lenders are offering this type of mortgage anyway.

95% LTV mortgages with Mojo

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Just answer some questions about your situation and let Mojo's expert advisors guide you to a mortgage tailored to your needs. And the best part of it all is, it’s completely free (yes, really!).

With access to lenders across the whole of the market, Mojo advisors strive to save you money and find your best 95 mortgage.

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Am I eligible for a 95% mortgage?

Eligibiliy for a 95% mortgage depends on your lender's criteria and your financial situation. Other general factors that could affect your eligibility include:

Credit history - a good credit history increases your chances of approval. Lenders check your credit score to assess your reliability in repaying debts.
Income and affordability - a stable income and good affordability ratio tells the lender that you can afford the monthly mortgage payments.
Property type - some lenders have restrictions on the type of propery they're willing to offer 95% mortgages for, such as new builds.

To know if you're eligible for a 95% mortgage, we recommend speaking to a mortgage broker like Mojo Mortgages. Mojos's expert advisers can evaluate your specific situation and inform you on the liklihood of an approval.

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Should I wait and save up a bigger deposit?

There are currently 95% LTV mortgage deals in the market, but you may want to consider saving up a larger deposit.

Even if you can save up a bit extra to bring your deposit to 10%, this would give you access to 90% LTV mortgage deals. Which normally come with better interest rates, and there is a greater choice of deals generally.

But if it may take you a long time to save a larger deposit and you'd like to get on the property ladder faster, a 95% mortgage may be a preferable option.

Whether a 95% mortgage is right for you depends on your individual circumstances. Whatever you decide, make sure you're in the financial position to afford a home and the mortgage you apply for.

Advantages and disadvantages of 95% LTV mortgages

Advantages of 95% LTV mortgages:

A 5% deposit is easier to save than a larger deposit
They can help you get on the property ladder and start building equity in your own home faster
You usually get better deals and rates with a 90% LTV mortgage compared to a 95% mortgage
This might allow you to keep some money back, which could be used for home improvements or emergencies

Disadvantages of 90% LTV mortgages:

You normally pay higher interest rates compared to those who put down larger deposits
You usually pay far more in interest over the course of your mortgage compared to borrowing less for a lower LTV deal
There's a greater risk of negative equity (when your property is worth less than what you owe on your mortgage, which could be happen if house prices fall) compared to lower LTV deals

Alternatives to 95% mortgages

A lower LTV mortgage

This could work if you're able to save up a larger deposit. You may want to open a Lifetime ISA which offers a 25% boost on savings for your first home up to a certain amount. If a family member is able to contribute, they could also gift you part of your deposit to help you get a higher LTV deal.

Guarantor mortgages

This is one way you can get a no deposit mortgage. It's a mortgage that's supported financially by another person (as well as the applicant), known as a guarantor.

Offset mortgages

This is where a family member puts up their savings or house equity as a deposit

Shared ownership

This is a government scheme that allows you to buy a share of a home, rather than the whole property. You pay rent on the remaining amount. You can increase your equity share over time until you own it fully.

Help to Buy equity loans

Only currently available in Wales and on new build homes. You need to save a 5% deposit and you get a 20% equity loan to boost this.

Right to Buy

Right to Buy may help you to buy your council home at a significant discount from market value. Right to Acquire is a similar scheme for housing association tenants.

What our mortgage expert says

"95 mortgages might help you get on the property ladder sooner rather than later. But if you can save up a bigger deposit, you normally get access to a better range of deals. At Mojo, we can give you a mortgage in principal, also known as an agreement or decision in principle, which is a document that tells you how much a bank or building society may be willing to lend you.This helps with budgeting for a property."

Claire Flynn Contributing Senior Content Editor (former) - Mortgages

Mojo's customer says:

“Very good experience. My mortgage advisor took his time, listened to what I needed and found the best deals for me. I felt listened to and valued. Kindness and honesty throughout the process.”

Victoria - Mojo Mortgages customer (January 2024)

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Mojo mortgages have a 4.5 rating based on 4387 reviews
as of 09/04/2024

Tips & guides on 95 mortgages

What are the different mortgage types?

Whether you’re a first-time buyer or know the process well, we’ve got you covered.

Loan to value explained

What is loan-to-value (LTV) and what does it mean for buying a house?

How to make an offer on a house

After what seems like an eternity of searching, you've finally picked the house you want. Now you need to buy it.

Mortgages in principle

Let us take you through what you need to know about a mortgage agreement in principle.

See all mortgage guides

Need more help?

What costs are involved with 95% mortgages?

The main costs involved with a 95% LTV mortgage are:

Your deposit - you need a deposit worth 5% of the property value or price (whichever is lower)
Interest rate - the higher your initial interest rate, the larger your monthly repayments are, and vice versa
Arrangement fee - this is the main fee when getting a mortgage and can vary depending on the deal
Legal fees - the cost of a solicitor to sort the legal paperwork may be included as part of the mortgage deal, but it's not always so make sure you check the terms and conditions to find out how much it is
Valuation fee - lenders usually want to conduct a property valuation to make sure the amount you're paying for the property matches up, but this fee may also be included as part of a deal
Broker fee - some mortgage advisers charge for providing advice, but not all do

It's important to be aware of all the associated costs and fees when comparing mortgages so you can choose a deal to suit your circumstances.

Can I get a mortgage with less than 5% deposit?

5% deposit is usually the minimum amount accepted by mortgage lenders.

There are a few 100% LTV deals on the market which allow you to get a mortgage with no deposit. But these usually require a family member to act as a guarantor, or put up their own savings or home equity as a deposit.

Skipton Building Society has launched a 100% mortgage deal for those with a strong track record of rental payments, but who are struggling to put away money for a deposit.

Can I get a 95% mortgage on a new build house?

Lenders usually want a 15% or 20% minimum deposit for a new build property. But there are schemes available that can help you get a new build home with a smaller deposit.

The Deposit Unlock Scheme can help you buy a new build home with a 5% deposit, but you must use one of the participating builders and lenders.

If you're in Wales, you can still get apply for a Help to Buy equity loan. This provides a 20% equity loan to boost your 5% deposit.

And you could consider shared ownership on a new build property, which would mean you could purchase a share of the property and pay rent on the rest (so the deposit amount required would be less).

Can I get a 95% mortgage as a first-time buyer?

Yes you may able to get a 95% LTV mortgage as a first-time buyer. A barrier to home ownership is often saving for a deposit. 95% mortgages can be appealing to those looking to buy their first home, as a 5% deposit is more manageable to save than a larger one.

But whether you're eligible for a 95% mortgage deal depends on your individual circumstances, and whether you meet the lender's criteria. As well as a 5% deposit, they look at your income, outgoings and credit history.

Page last reviewed: 9 April 2024

Reviewed by: Claire Flynn

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