95% mortgage (5% deposit) explained

A 95% mortgage lets you buy with a 5% deposit, borrowing the remaining 95% of the property value. It is the main route onto the ladder for buyers with limited savings. Because you are borrowing a high proportion, rates are higher than lower loan-to-value deals and lenders look harder at your credit and income. As you repay or the value grows, you can usually remortgage to a better rate.

What to expect

At 95% loan-to-value, the lender is financing almost the whole purchase, so it carries more risk and prices accordingly. Expect a higher rate than at 90% or below, and expect the lender to scrutinise your credit history, employment and affordability more closely. None of that is a barrier to a buyer with a clean file and steady income; it simply means the rest of your profile matters more when the deposit is small.

How to put yourself in the best position

• Keep your credit record clean and be on the electoral roll.
• Avoid applying for new credit in the months before your mortgage application.
• Reduce credit card balances and clear small debts where you can.
• If you can reach a 10% deposit, do: the jump from 95% to 90% widens choice and cuts the rate.

The longer game

A 95% mortgage gets you in; it does not lock you in. As you make payments and if the property value rises, your loan-to-value falls into cheaper bands, and you can remortgage onto a better rate when your deal ends. Think of the higher initial rate as the cost of starting with a small deposit, not a permanent position.

Common questions

See how much deposit you need, or lower the entry cost with shared ownership.