See the best rates out there for 95% LTV mortgages. This tool will show you the top rates, but can't tell you if you're eligible for them - our experts can check that for you later and make sure you have a 5% deposit or 5% in equity.
Capital + interest: you pay off part of your mortgage each month, and interest on top. By the end of your mortgage term, your loan will be paid off in full.
Interest only: you only pay interest on your mortgage each month, but none of the mortgage debt itself. At the end of your term, you'll have to pay it off in full.
Your Loan to Value (LTV) would be 80% with a deposit of £40,000.
LTV means loan-to-value – it’s the size of your mortgage as a percent of the total property value. In other words, how much of the value of the property that you’re borrowing. A 95% LTV mortgage is 95% loan, 5% deposit or equity.
Say you want to buy a property worth £250,000. A 95% LTV would mean you have a deposit (or equity) of £12,500, so the amount you’re borrowing is £237,500.
LTV is calculated as a percentage – how much you’re looking to borrow versus the value of the property you’re purchasing or remortgaging.
If you know how much you’ll need to borrow, just divide the mortgage amount by the value of the property. To use the same example, £250,000 ÷ £237,500 = 0.95. Multiply that by 100 and you get 95% LTV.
If you know how much deposit you have but don’t have a property in mind yet, multiplying your deposit amount by 20 lets you see what you could buy at 95% LTV.
LTV is important to think about because it determines the mortgage rate, and affects how lenders calculate whether the mortgage is affordable for you. The lower your LTV, the lower the rates, and the more mortgage options you’ll have.
A 95% LTV mortgage is at the very top end of the typical range – usually, lenders offer LTVs between 50% and 95%. With a 95% LTV, you’ll have limited options to choose from with more expensive rates, because lenders are taking on more of a risk. You’ll most likely need to have an excellent credit score.
It might be worth thinking about whether you’re able to save more money for your deposit or lower your mortgage amount, which will open up many more options with a lower true cost, which means you’ll pay less in the long run. A mortgage expert can talk through your options with you.
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