95 LTV Mortgages

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What Is A 95% Loan To Value Mortgage?

The loan to value ratio of a mortgage indicates how much of your property you own outright (covered by your deposit, and commonly known as equity) and the amount you are borrowing (covered by your mortgage), expressed as a percentage.

Therefore, a 95% LTV mortgage means that you are borrowing almost the entire value of the property and paying only a small deposit.


For example, if you were to buy a property worth £500,000 on a 95% LTV mortgage, you would pay a deposit of £25,000 and borrow the remaining £475,000 in the form of the mortgage.

Who is eligible for a 95% LTV mortgage?

A 95% LTV mortgage is at the higher end of the range of LTV deals available, as it only requires a 5% deposit, and may therefore be suitable for those who are first time buyers or do not have the resources to save up a larger deposit.

However in 2020 lenders started withdrawing 95% LTV mortgage products over fears that the property market might be adversely affected by the pandemic. These fears have eased now, but many mortgage providers are only offering 90% LTV products.

The good news…

In the March 2021 budget, the government launched a new guarantee scheme for people wanting to buy with a 5% deposit. 

95% LTV mortgage lenders will consider criteria such as:

  • Your earnings – Do you earn enough to borrow the amount you want?
  • The stability of your income – Are you self-employed or new in a job?
  • Your outstanding debts – How much debt do you have?
  • Your credit rating – Have you ever missed a mortgage payment or other repayment in the past? Do you have any County Court Judgments (CCJs) against you? Have you even been bankrupt?
  • Your eligibility for the Help To Buy scheme – if you apply for a 95% LTV mortgage under the Help to Buy scheme you will be required to fulfill certain additional criteria specific to this scheme.

How much will a 95% LTV mortgage cost?

A high LTV mortgage, such as a 95% LTV mortgage, will generally be more expensive than mortgages with lower LTVs as the bank is taking on more risk due to the greater amount owed.

If you can by increasing your deposit to 10% you will have a much wider range of deals to choose from and you will typically pay less per month on your repayments because the rate of interest you will be offered will be lower.

What are help to buy mortgages?

This scheme helps you get on the property ladder by making the cost of a mortgage more affordable.

It allows you to take out a loan which you then add to your deposit for a house you want to buy.

The scheme is available to first time buyers and homeowners looking to move.

The home you want to buy must be newly built with a price tag up to £600,000.

The scheme allows you to put down a smaller deposit with up to 20% of the cost covered by a shared equity loan.


Property Purchase price – £200,000

Your cash deposit – £10,000 (5%)

Shared Equity Loan – £40,000 (20%)

Your Mortgage – £150,000 (75%)

What does it cost?

  • You are not charged fees for the first 5 years of owning your home
  • There is no interest to pay on the loan for the first 5 years – after that you pay a fee of 1.75% of the loan’s value. This increases by RPS (Retail Price Index) which is a measure of inflation plus 1%.
  • Paying fees do not count towards paying back the loan amount.

What happens if you sell your house?

So the scheme requires you to pay back the loan or sell your house after 25 years. How much you pay back will depend on the market value of your house at that time.


Market Value                                          Equity loan taken out                                   Amount

House bought for £200,000                         20%                                             Borrowed £40,000

Sold for £250,000                                               20%                                             Pay back £50,000

There are no tables for this criteria

There are no tables for this criteria

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