95% mortgages
mortgage guide

With a 95% mortgage, you borrow 95% of the property's value and put down a 5% deposit. So they can also be known as 5% deposit mortgages.

This type of mortgage was quite common until the financial crisis of 2008. Since then, lenders have been more reserved in offering them but they are starting to become more common again now.

95% mortgages are good for first time buyers who are finding it hard to save more than a 5% deposit, perhaps due to the pressure of meeting regular financial commitments or high house prices in the area. The Government has also stepped in and launched the Help to Buy scheme to assist more people onto the property market. Read our full guide to Help to Buy for all the details on how this could benefit you.

You can use our mortgage deposit calculator to work how long it will take you to save up the necessary funds or look at our Help to Buy calculator if you are interested in taking that route instead. If you are struggling to raise any deposit amount at all then there may be 100% mortgage options available, however, since the credit crunch they are extremely rare.

  • Perhaps it's obvious, but with this type of mortgage you only need a relatively small deposit, thus making buying a house a viable option for more first time buyers.

  • With only a small deposit, 95% mortgages can be risky. If your house drops in value by more than 5% putting you could drop into negative equity. If this happens, your options become incredibly limited.

It is important to have an understanding about all mortgage options before you make a decision. On the one hand, a 95% mortgage could offer you the lifeline you need to get onto the property ladder. But stop and think, 'should I buy a home?', the answer is not always yes! It is usually

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*https://www.moneyadviceservice.org.uk