95% Mortgages with 5% Deposits

Unbiased 95% mortgages from one of the UK’s leading mortgage brokers.

Are you a home-mover or first-time buyer looking to take advantage of the 95% mortgage with 5% deposit scheme? Get in touch with Fees Free Mortgages today to discover your perfect 95% mortgage deal.

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What is the 95% Mortgage Guarantee Scheme?

The 95% mortgage scheme was launched on the 19th of April 2021 by the government, and will initially run until the 31st of December 2022. As a result, the government will partially guarantee the mortgage, specifically the amount over 80%. With a 5% deposit mortgage, this means that the government guarantees 15% of the value of the mortgage. In the event the homeowner defaults on their mortgage repayments, the government will compensate the lender this amount.

By shouldering some of the risk, the government is encouraging lenders to offer 95% mortgages with a 5% deposit. These smaller deposits can be saved up for quicker than traditional 10% or 20% deposits, which means that you can be settling into your new dream home sooner, rather than later.

Discover how Fees Free Mortgages can help you find the perfect 95% mortgage with a 5% deposit scheme to help you to get on the housing ladder, or help you take the next step.

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How the 95% Mortgage Scheme with a 5% Deposit Works

The 95% mortgage guarantee scheme has been designed to help enable prospective home-buyers to purchase either an existing property or a new build with a 5% house deposit. As we’ve touched on, the government will guarantee up to 15% of the LTV (loan to value) mortgage. As a result, the risk to lenders is reduced, which helps them accept a 5% mortgage deposit. Additionally, home-buyers will also have the option to fix their 95% mortgage repayment rate for the first five years.

What are the conditions?

The property you are looking to purchase must be for your residential use. Second homes and buy-to-lets are excluded. The property must also be valued at £600,000 or less and can be either an existing or new-build property. The only mortgages available for the scheme are repayment mortgages. Interest-only mortgages are excluded. These details represent the upper bounds for what’s included in the scheme, for example, some lenders may only participate up to a smaller total property value, or may exclude new-builds from a 95% mortgage.

Who can get involved?

5% home deposits will be available to first-time buyers and home movers UK-wide. As with other mortgages, you will have to pass typical affordability checks, such as a loan-to-income test, and a credit score assessment to secure your 95% mortgage.

Why has the 95% mortgage guarantee scheme been launched?

From the start of the coronavirus pandemic lockdown in March 2020, the number of low deposit mortgages available to buyers dropped drastically, almost to zero. Lenders thought there was too much risk involved in the market at the time. By guaranteeing part of the 95% mortgage, the government is helping reduce the risk to lenders, and so enabling 5% deposits.

A leading 95% mortgage broker with a professional, transparent and genuine approach

If a 95% mortgage with a 5% deposit is the option for you, get in touch with our 95% mortgage advisors. We will consider your situation alongside available deals before offering unbiased advice about which mortgage deal is best for you.

How it works

Get a 95% Mortgage in 5 Easy Steps

The team at Fees Free Mortgages understands the importance of finding the right 95% LTV mortgage for you. As a result, we work on a commission-free basis and aren’t tied to any one lender. Our brokers and advisors are motivated by your needs and ambitions – meaning we’ll find the most suitable deal for you.

1. Initial Discussion

Our friendly fact-finding process will allow us to understand your goals and objectives. Your 95% mortgage advisor will work with you to understand any hurdles to securing a mortgage at this stage – it’s hugely important to make sure you meet the scheme’s requirements before digging in. We’ll also explain exactly who we are and what you can expect from our service.

2. Review the 95% mortgage market on your behalf

Our experts get straight to work exploring the maze of 95% LTV mortgage lending criteria for you. We’ll make affordability and credit assessments ensuring the recommendations we make are suitable for your individual needs.

3. Share our recommendations with you

We’ll illustrate the facts and figures in an easy-to-understand presentation, including the justifications behind the recommendations.

4. Package & submit a full 95% mortgage application

Our 95% mortgage submission route is much easier than an ‘in branch’ experience. Why sit through a 2-hour interview with the bank for instance when we can do this for you?

5. Oversee the process to completion

If solicitors are introduced, don’t worry. We’ll assist you with their paperwork and we can talk to them on your behalf. Fees Free Mortgages act as the middle man right through to completion.

95% Mortgages with 5% Deposits – Our Tailored Approach

Take the next step in your property adventure with the help of our 95% mortgage experts. Whether you are looking to take your first step on to the property ladder with a 5% deposit mortgage for first-time buyers, or you are an experienced home mover looking for a 95% LTV mortgage for your next move, Fees Free Mortgages will find the best deal for you.

Fees Free Mortgages understand that your situation is unique – that’s why our advisors work to tailor our 95% mortgage services to your exact requirements. Click the button below to get in touch with our friendly 95% mortgage advisors, who’ll keep you in the loop whilst finishing the ‘fact-finding’ and research process.

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Why Fees Free Mortgages?

We’ll find the best 95% mortgage deal that suits you and give you expert financial advice while taking care of your whole mortgage application. Best of all, we’re FEES FREE! Putting the Free in Fees Free Mortgages.

Fees
Free

No mortgage broker fees – Many firms charge upfront fees, or fees on completion.

Personal
Service

No call centres and only 2 points of contact (Mortgage Broker & Case Manager)

Unbiased
Advice

We review the whole of the market, giving unbiased and independent mortgage advice.

Regulated &
Accountable

We are directly authorised by the FCA and fully accountable for the mortgage advice we give.

Free
Advice

Free financial advice, including; mortgage, life insurance & protection.

Ongoing
Contact

We handle all the hard work and keep you updated until your mortgage completes.

We’re Not Just a 95% Mortgage Broker…

We love providing whole of market mortgage advice across the UK and believe that any interaction with us will be a positive experience because we do our best to help you achieve all your mortgage goals!

First Time
Buyers

We love helping you get on to the property ladder. We’ll oversee your first purchase from start to finish!

Buy-to-Let

Looking to jump-start your investments with a buy-to-let mortgage? We will find you the best deal!

Remortgages
.

We’ll review your options with your existing lender and compare them against the market for you.

95% Mortgages

Whether you’re an experienced mover, or a first-time buyer, take advantage of the 95% mortgage guarantee scheme today!

Help to
Buy

Need Help to Buy advice? Our straightforward team of Help to Buy experts will put you in the picture.

Self-Employed
Mortgages

Are you self-employed and looking for an excellent mortgage deal? Our simple process will explain it all to you, and give you peace of mind.

95% Mortgages with 5% Deposits (FAQs)

Who qualifies for 95% mortgages?Callum Marshall2021-06-17T13:18:11+01:00

Who qualifies for 95% mortgages?

The Mortgage Guarantee Scheme is available in England to all homebuyers who can save a 5% deposit. This is on condition that the property will be your only home, located in the UK, and of a maximum value of £600,000. This scheme will run until the 31st of December 2022.

The government has said that they will enable the scheme to be used by lenders for both new-builds and existing properties, but lenders are not obliged to have to include both. Some lenders include both, but others will only include certain buildings and exclude flats and maisonettes. This varies from lender to lender.

Are 95% mortgages a good idea?Callum Marshall2021-06-17T13:17:32+01:00

Are 95% mortgages a good idea?

The main, and most obvious benefit of 95% LTV mortgages is that they only require a 5% deposit, which means you can save for a deposit in less time. This could be especially important for first-time buyers, as house prices could increase at a faster rate than they can save.

However, as this means that lenders shoulder a greater risk of loss in the event the buyer defaults on their payments, it means that often the maximum amount that can be borrowed is less than mortgages with traditional deposits, irrespective of credit rating and income. This maximum usually sits at £250,000.

Additionally, because of the increased risk to the lender (because they are lending a greater sum of money with less deposit from the buyer), these mortgages will often command a higher interest rate than their counterparts. Usually, the higher the LTV ratio for the mortgage, the higher the interest rates are on the mortgage.

Furthermore, because (for example, in the case of taking out a 95% mortgage) you will start out with 5% of the value of your home, a buyer’s risk of being in negative equity will increase. This can occur when house prices drop, and your left owing more mortgage than the house is worth. As time passes and your percentage of ownership of the property increases, this will be increasingly negated.

Finally, it may be more difficult for you to remortgage. Because your percentage ownership of the property is low (for example, you paid a 5% deposit), your LTV will take longer to decrease to the point where you can get the better rates offered from remortgages.

Are 95% mortgages still available?Callum Marshall2021-06-17T13:16:59+01:00

Are 95% mortgages still available?

In the aftermath of the COVID-19 pandemic, many areas in the finance industry were hit, including mortgages. Many high loan-to-value (the ratio of loan to the appraised value of a property) mortgages were discontinued during the pandemic, but thanks to government initiative, 90% and 95% mortgages have returned.

Certain lenders are now offering 90% and 95% mortgages again, that only require 10% or 5% deposits respectively. This means that prospective homebuyers, particularly first-time buyers, can save up for a house deposit faster than they previously could, meaning that you could own your own home sooner than before.

Can I get a 95% mortgage?Callum Marshall2021-04-19T12:20:10+01:00

Can I get a 95% mortgage?

The 95% mortgage guarantee scheme is available for application by all UK-based first-time buyers and home movers. Like other mortgages, you must pass an affordability test to prove you can afford the mortgage repayments, and a credit score assessment to show lenders that you have managed previous debts responsibly.

If your credit history is currently less than excellent, you should begin to improve it at least six months prior to applying for a mortgage. You can do this by setting up direct debits to ensure bills are paid on time, registering to the electoral roll, and more.

In addition to this, it is a good idea to check your credit file before you make your application to ensure it is error-free. Small mistakes, like not updating your address after your previous move could affect your chances of being approved for a mortgage.

How does the 5% deposit scheme work?Callum Marshall2021-04-19T12:19:16+01:00

How does the 5% deposit scheme work?

Running initially between April 2021 and December 2022, the 5% deposit (95% mortgage) scheme aims to make banks and building societies more willing to offer mortgages with smaller deposits by making the government liable for the fraction of the mortgage above 80% should the homeowner default on mortgage repayments.

The mortgages offered as a part of the scheme must only be for residential purchase (you must live in them; buy-to-let and second homes are excluded) only, valued at £600,000 or less, and can be for either existing or new build properties. Repayment type mortgages will be the only type of mortgage on offer under the scheme, and there is the option of an initial fixed rate for the first five years.

Can you pay a 5% deposit on any house?Callum Marshall2021-04-19T12:18:26+01:00

Can you pay a 5% deposit on any house?

Under the terms of the 5% deposit (95% mortgage) scheme, second homes and buy-to-let properties are not eligible to participate; you must live in the property. Existing and new-build properties, both to a value of £600,000 are eligible for 5% deposit mortgages initially until the 31st of December 2022.

Coming into effect on the 19th of April 2021, the scheme defines the maximum bounds the government will back. Some lenders will differ, for example, Santander will only participate in the scheme with existing builds, not new builds, and will only offer mortgages for flats and other leasehold properties up to a value of £400,000.

What is a 95% mortgage?Callum Marshall2021-04-19T12:17:31+01:00

What is a 95% mortgage?

A 95% mortgage is a loan from a bank or building society that makes up 95% of the market price of the property you seek to purchase. The remaining 5% is your deposit. With a 5% mortgage deposit, you’ll be able to save up to buy your dream home sooner.

For example, with a 95% mortgage on a £200,000 property, you would need to save £10,000 (the 5% deposit) to be eligible. 95% mortgages typically come with higher interest rates as a compromise, compared to mortgages with a larger deposit. Additionally, as a part of the government’s 95% mortgage guarantee scheme, 95% mortgages will only be repayment mortgages, not interest-only mortgages.

Who offers 95% mortgages?Callum Marshall2021-04-19T12:16:38+01:00

Who offers 95% mortgages?

The 95% mortgage scheme is gaining traction among a variety of major lenders. Banks such as Halifax, Lloyds, HSBC, Barclays, and Santander are participating in the scheme, with many more banks and building societies to follow suit in the coming months.

Both building societies and banks are not legally obliged to offer mortgages with 5% deposits, but many have committed to launching 95% repayment mortgage deals to help first-time buyers get their foot on the housing ladder, and to help home movers to release equity. Buyers will have the option of a fixed rate for the first five years too.

Find out about 5% Deposit Mortgages Today

Looking to get a 95% mortgage with a 5% deposit? Get in touch with Fees Free Mortgages today. The top 95% mortgage broker in Essex & Suffolk.

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