Are you looking for a 95% LTV Mortgage?
As an independent Mortgage Brokers, Bristol, Weston, Bath and Exeter Mortgages Online, have access to over 100 lenders, some of whom only deal with Intermediaries like us. Many of the mortgage products available offer a high Loan to value mortgage, often with only a 5% deposit.
Types of 95% mortgages
Higher Loan to Value mortgages can be used for
- First Time Buyers
- Those looking to move home
- Those looking to remortgage
What is a 95% mortgage?
A 95% mortgage is simply one where you borrow 95% of the cost of the home you want to buy - also described as having a 95% loan-to-value (LTV) ratio. Therefore you'll need a 5% deposit up front, and the loan covers the remaining purchase price.
How do 95% mortgages work?
With a 95% mortgage, you pay a deposit worth 5% of the property value. The mortgage lender then loans you the remaining 95%.
Example: For a property costing £150,000 you'd need £7,500 for a 5% deposit. Your lender would then lend you £142,500 to cover the remaining 95%.
You'll repay the 95% loan over the full term of the mortgage (an average of 25-30 years), alongside interest payments. The interest rate will depend on the deal you get when you first take out the mortgage.
This helps first-time buyers get on the property ladder faster - as saving a larger deposit might delay this by a few years. There aren't as many 95% mortgage options as there are for lower LTV products though, so some buyers may still prefer to save a bit longer.
It's also worth considering that a larger deposit (and therefore lower LTV) will give you access to more competitive interest rates.
Why does loan-to-value matter?
The loan-to-value ratio is a huge factor for lenders to decide how much they can lend you, and at what rate.
If you borrow more in relation to your home's value, then you're a higher risk for the lender, as there’s more for you to pay back.
That also means there’s more risk for you, the borrower. The more you borrow, the more you have to pay back and, crucially, the more interest you will eventually pay over the lifetime of the mortgage.
Am I eligible for a 95% mortgage?
Eligibility for 95% mortgage deals is similar to lower LTV mortgages, with the same affordability criteria applied that lenders will be looking for so that they can be confident in your ability to make repayments.
A prospective lender will assess your income, as well as reviewing your expenses and any debt you owe before deciding whether or not to offer you a mortgage. Your credit history will affect your ability to borrow too. The best 95% LTV mortgage rates will be available to those with a good credit score and stable income.
How much can I borrow with a 95% mortgage?
How much you can borrow from a mortgage lender depends on your individual affordability.
A lender will generally base your borrowing on your annual income – you can normally borrow around 4-4.5 times this figure.
However, they will also look at your outgoings to determine whether you can afford the repayments. That's why it's often a good idea to assess your spending habits three to six months before applying for a mortgage.
Lenders also review your credit history to check whether you can reliably manage debt. It's worth checking your credit score before you apply and trying to resolve any issues, including errors on your report.
Will the interest rate on a 95% ltv mortgage be higher?
Yes, it's highly likely that it will be higher than someone borrowing at a lower LTV. This is because the lender considers the greater the LTV the greater the risk to them. They, therefore, charge a higher rate to compensate this.
Mortgage rates tend to reduce in increments of around 5%, so if you could offer a 10% deposit, rather than 5%, this would be likely to make a difference to the rates available to you.
Should I save more and avoid getting a 95% LTV mortgage?
It really depends on your priorities. If you're looking to move as soon as you can, you may feel that paying a higher rate of interest is warranted - especially if house prices are expected to rise.
If your main priority is to pay the least interest possible over the duration of your mortgage term, it's probably best to save as much as possible before you start the home buying journey. Those with a larger deposit will almost always benefit from better rates.
Regardless of your situation and how much deposit you have, we will be delighted to discuss your mortgage options with you.
Contact Us
For further details about the mortgage and protection products we offer as a fully independent mortgage broker, or any other mortgage information, book your FREE CONSULTATION with one of our expert Mortgage and Protection Advisers.
Bristol Mortgages Online www.bristolmortgagesonline.com Tel 0117 325 1511
Bath Mortgages Online www.bathmortgagesonline.com Tel 01225 584 888
Weston Mortgages Online www.westonmortgagesonline.com Tel 01934 442 023
Exeter Mortgages Online www.exetermortgagesonline.com Tel 01392 690 888
Email info@swmortgages.com
