More 95% Mortgages are Available
According to data from Moneyfacts, the availability of 95% Loan to Value Mortgages has reached a two year high*. Is this good news for First Time Buyers? Adam Nanson from Your Mortgage Expert comments on the news that more 95% mortgages are available.
What is a 95% mortgage?
“Loan to Value is the ratio between the amount you want to borrow and the loan you need to borrow it. The higher the Loan to Value or LTV, then the smaller the deposit you need to put down on your house.
“With a 95% mortgage, you only need to put down a 5% deposit. This can be helpful for people who have struggled to save a large deposit such as First Time Buyers.
“There are also interesting, new deals coming onto the market for First Time Buyers. One lender we have access to for example is now offering a £5,000 deposit mortgage with a maximum Loan to Value of up to 99%**.
“It’s good news that there are more Higher Loan to Value products such as these available as they are a useful tool for getting on the property ladder.
“95% LTV mortgages aren’t for everyone. We would advise you to speak to a mortgage adviser like us who will weigh up your options. It might be that saving for a larger deposit might be better for you.”
Is a 95% mortgage for me?
Broadly speaking, these are the advantages and disadvantages of a 95% LTV mortgage:
Advantages of a 95% mortgage
- Low Deposit: Enables you to buy a house with a lower deposit
- Gets you on the Property Ladder: Can be a good stepping stone to get you on the property ladder
- Could be cheaper than renting: Your loan repayments might be less than renting a similar property
- Build up Equity: If your house increases in value, then when you remortgage you might be able to quickly move onto a lower Loan to Value mortgage
Disadvantages of a 95% mortgage
- Higher mortgage rates: If you have a larger deposit, you often get better mortgage rates
- Limited Loan Amount: Most 95% mortgages have a restricted loan amount
- Risk of Negative Equity: if house prices drop, you could fall into negative equity more quickly
- Higher Fees: Often lenders charge higher fees to protect themselves from mortgage defaults
Are there other options available
If you only have a small deposit, then there are other options available. You might want to consider Shared Ownership, Gifted Deposit or Forces Help to Buy for example.
If you speak to a broker like Your Mortgage Expert, we will run through your circumstances and look at what option is for you.
We are experts in all the schemes to help First Time Buyers get on the property ladder. We can search 1000s of mortgage products from multiple lenders to get you in the ideal position to buy a home.
If you are interested in our article on 95% mortgages are available, why not book a mortgage appointment today and see how we can help.
*Source: https://theintermediary.co.uk/2024/07/choice-of-low-deposit-mortgages-hits-2-year-high-moneyfacts/
**Source : https://www.accordmortgages.com/products/5k-deposit