95% Mortgages

What Is A Ninety Five Percent Mortgage?

If you borrow 95% of the purchase price of a home you are buying, you have taken out a 95% mortgage.

The percentage is simply a reference to how much of the property’s value you have borrowed.

95% mortgages are reasonably common, especially with first-time buyers, and are no longer subject to as many extra lending charges as they used to be.

Note: Higher Lending Charges or HLCs, are still charged by some lenders for mortgages in excess of 90% of the purchase price. If you receive a quotation from a lender that includes a HLC, think carefully before accepting. It is an extra cost and there are plenty of lenders that do not charge Higher Lending Charges anymore.


Why Choose A 95% Mortgage – Why Not 100%?

You may think that by taking a 100% mortgage and keeping your deposit you will be better off – after all, you will hardly notice the extra payments, right?


By putting down a 5% deposit and getting a 95% mortgage, you are likely to get a lower interest rate and will save a significant amount of money on reduced interest payments over the life of the mortgage – remember, mortgages last 25 years (or more).

By putting down a deposit, you also provide some protection for yourself against negative equity – when your house is worth less than you owe on your mortgage.

A 5% deposit means prices can fall 5% before you need to worry – which can be very useful if you need to sell at a bad time.


I’m Convinced. How Can I Find The Best 95% Mortgage?

There are a lot of 95% mortgage deals around. Finding the best one on your own can be a little like looking for a needle in a haystack.

The best plan is to contact an independent mortgage adviser and let them do the legwork – they have access to computer programs that can search the entire mortgage marketplace, ensuring that you do not miss out on the best deal for you.

Now that you've read this are you interested in talking to a mortgage adviser? Fill out the quick form below and you'll be contacted soon by an independent, regulated mortgage specialist for a free no obligation quote.

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