If you’ve been trying to buy your first home, but haven’t yet saved up a big enough deposit, you could now be eligible to apply for a 95% loan to value (LTV) mortgage.
With a Government-backed 5% deposit mortgage, your moving dreams could become a reality sooner than you thought.
What is a 95% mortgage?
A 95% mortgage is a type of mortgage that allows you to borrow 95% of the property price from a lender. The remaining 5% is covered through your deposit.
How are these mortgages available?
These types of mortgages were available previously, but the number of 95% mortgage products largely decreased throughout the pandemic. However, the UK Government introduced a new scheme, valid from 19th April 2021, to incentivise lenders to reintroduce 95% mortgage deals.
What do I need to know?
- You can purchase properties up to £600,000 with a 5% deposit
- It’s open to all homebuyers (not just first-time buyers)
- Normal mortgage affordability checks will still be in place
Does this mean I can now get a mortgage?
As always, this depends on your individual circumstances and affordability, which can be assessed by an expert mortgage adviser. However, as you now only require a 5% deposit for a 95% LTV mortgage, many prospective homeowners could find they have enough to buy their first property.
For example, if you were aiming to buy a £200,000 property, you now only need a £10,000 deposit, rather than the £20,000 deposit you would have needed with a 90% LTV mortgage.
