90 & 95% LTV Mortgages
90% & 95% Mortgages are back – An update from The Mortgage Broker
Caroline Bignall from The Mortgage Broker team runs through all we need to know about 90% and 95% loan-to-value mortgages.
What is a 90% mortgage?
It’s a mortgage for 90% of the value of a home. So if you’re purchasing a property, you would need a 10% deposit, then the 90% remaining is paid for via the mortgage.
Can I buy a home with just a 5% deposit?
Yes, 95% mortgages are available. They have made a recovery recently because of the government’s mortgage guarantee scheme.
This has helped bring more 90% mortgages back to the market too, which is great news for buyers.
Will 90% deals get cheaper?
Ït’s a difficult question to answer because interest rates fluctuate. The annual interest rate is set by the lender and they can change them as they choose. The good thing is that, because most lenders are now offering 90% loan-to-value mortgages, interest rates should remain competitive.
WHAT ARE THE BEST 90% FIXED-RATE DEALS AVAILABLE?
Remember that rates do change regularly, but the 90% loan-to-value mortgages have rates as low as 2.99% at the moment. Bear in mind that a very low interest rate can often mean you will pay lending fees on top. But if you’re getting a 90% loan-to-value mortgage with an interest rate between 3% and 3.19%, that’s a good standard.
IS THAT THE SAME FOR 95% MORTGAGES?
Yes, although 95% loan-to-values are not fully on the market yet. But we are expecting those rates to be about 3.99%. That’s a little higher than 90% loan-to-value but competitive.
IS IT WORTH SAVING MORE TO GET A LOWER RATE?
Ÿes, if you’re able to do so. The lower the loan-to-value and the higher your deposit, the better interest rate you’re likely to get. For every extra 5% more deposit you can save, you’ll reach the next ‘band’ of interest rates, which will be lower.
Which lenders are offering 90% mortgages?
There are lots of lenders offering 90% loan-to-value: HSBC, Halifax, Nationwide, NatWest, TSB… all the high street lenders you would expect. There are also other lenders like Virgin. Most high street lenders and some others will be offering 95% mortgages too.
What are the advantages and disadvantages of a low deposit mortgage?
One of the biggest difficulties for First Time Buyers is raising the deposit. So being able to buy a house with a low deposit gives them a realistic chance to buy rather than rent.
The 90% loan-to-value mortgage is not just for First Time Buyers, it’s also for people moving home. So if you wanted to move to a property that’s more expensive than your current home, you might only have a 10% deposit – so you will benefit from buying with a higher loan-to-value.
HOW CAN A MORTGAGE BROKER HELP?
Every lender has different criteria, and these can change often along with interest rates. So the best way to get the most valuable deal is to compare products across lots of lenders, looking at rates and fees.
When you’re trying to work out the most suitable option, it really helps to get a professional to advise you. If you go directly to a bank, they can give you information – but only for their own products. Only Mortgage Brokers can explore a wide range of lenders and platforms.
IS IT NORMAL TO FIND MORTGAGES CONFUSING?
Getting a mortgage, whatever your circumstances, can be very daunting. There’s so much to it – different types of products, loan-to-value, interest rates… and you might have other complications: you’re a First Time Buyer, you want Help to Buy, or you have poor credit for example.
A High Street lender might turn you away for some reason – and you might think that it’s the end of your dreams to buy a home. But that’s not necessarily the case. Get in touch with a specialist because other products and lenders might fit your needs. We’ll explore all of the options and do our best to help you buy a home.