95% mortgages

It can be a challenge to find a mortgage when you have a small deposit, but there are plenty of options to consider. Here’s our guide to 95% mortgages where you need just a 5% deposit.

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What is a 95% mortgage?

A 95% mortgage is a secured loan where your lender covers 95% of the cost of your new home. You then put down the other 5% as a deposit.

Let’s say you’re interested in a house on sale for £200,000. With a 95% mortgage:

Your mortgage provider would lend you £190,000
You’d then need to put down a 5% deposit of £10,000.

You might also hear 95% mortgages called 5% deposit mortgages or 95% loan-to-value (LTV) mortgages.

A 95% mortgage can be a good choice for first-time buyers who often struggle to save up more than a 5% deposit, particularly when house prices are high and rising. However, this type of mortgage usually comes with higher interest rates.

Not every bank or building society offers 95% mortgages for first-time buyers, but many high-street lenders do.

What are the advantages of a 95% mortgage?

The main advantage of a 95% mortgage is that you’ll only need a 5% deposit to buy a property. This can be helpful if saving up a big lump sum is a tough task and means you could:

Get on the property ladder sooner – if house prices are rising in your area, waiting to save more could mean home ownership stays out of reach.
Start small, then move up – you don’t have to find your ‘forever home’ right away. A 95% mortgage can get you into a starter home now, with a plan to move somewhere bigger later.
Build equity as you go – as you pay off your mortgage, you reduce what you owe and start building equity (and even more so if house prices rise). This means that once your current deal comes to an end, you could remortgage to a better deal.

What are the disadvantages of a 95% mortgage?

While a 95% mortgage could be your ticket to becoming a homeowner, there are some disadvantages to be aware of.

Higher interest rate

A 95% mortgage won’t give you access to the cheapest deals on offer. The general rule of mortgages is the bigger your deposit, the better the interest rate.

Lower rates are available when your deposit goes up by 5%. So if you can stretch to a 10%, 15%, 20% or higher deposit, you’ll find you can choose from more deals and better rates.

Greater risk of negative equity

When you borrow such a big percentage of a property’s value, you run a bigger risk of slipping into negative equity. This is when your home is worth less than the size of your outstanding mortgage.

Say you buy a house for £200,000 - to pay for it, you put down a £10,000 deposit and a bank lends you the other £190,000 in a 95% mortgage.

Two years later, you’ve paid off £10,000 of your mortgage and now owe £180,000 in total. However, the value of your home has fallen to £170,000 - it’s worth less than what you owe, so you’re in negative equity.

Higher lending charge (HLC)

Some lenders charge extra fees to protect themselves when you're borrowing a high percentage of the property’s value – usually anything above 80% or 90%.

This is called a Higher Lending Charge and might be a flat percentage (e.g. 1.5%) or calculated based on how much you’re borrowing above a certain limit.

Bear in mind...

Always double-check what fees and charges come with your mortgage. It’s not just about the interest rate – you want to be sure you can comfortably afford any potential extra costs.

How to choose the right 95% mortgage

Mortgages work in different ways:

Discounted rate, fixed or tracker

With a discounted rate mortgage:

The interest rate is set at a given percentage below the lender’s standard variable rate (SVR) and will go up or down in line with it.
Typically, the discounted rate tends to be for a short introductory period of two or three years.

If you choose a fixed rate mortgage:

The interest rate stays the same for a set period, which can make it easier to budget
Fixed periods are typically two, three or five years.

With a tracker mortgage:

Your interest rate will go up or down depending on the Bank of England base rate
You’ll benefit if there’s a fall in the rate, but you’ll pay more if it rises.

Quick tip

Some lenders offer special rates for new customers, so explore different offers between providers to see what might be available.

Variable rate mortgages

With a variable rate mortgage, the lender can choose to raise or lower the rate at any time.

Once your fixed, tracker or discounted rate mortgage comes to an end, you’ll normally be moved onto your mortgage lender’s standard variable rate (SVR). Lenders set their own SVR, and it’s typically based on (but above) the Bank of England base rate.

Interest rates tend to be higher on SVR mortgages, so it’s a good idea to look around for remortgage deals when your initial deal comes to an end.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Am I eligible for a 95% mortgage?

Whether you’re eligible for a mortgage will depend on your financial situation and your lender’s criteria.

As a general rule, many lenders will need you to be:

A UK resident
Aged over 18
Putting down at least 5% deposit
Buying a home worth no more than £600,000
Getting a residential property (not a buy-to-let)
Getting a repayment mortgage (not interest-only)

Lenders will then look at your circumstances to decide whether to offer you a 95% mortgage, including:

Your credit history

You’ll probably need a very good or excellent credit history to be accepted for a 95% mortgage. Lenders are going to cover a big chunk of the property’s value for you, so they’ll want to see that you’ve managed debt responsibly in the past.

If your credit history isn‘t as healthy as it could be, it’ll help to start working on it early. Ideally, you should give yourself at least six months to begin trying to improve your credit score before you want to apply for a mortgage.

Quick tip

Even paying your credit card bill late can impact your credit score.

Setting up Direct Debits can help make sure everything is paid on time.

Affordability

You’ll have to prove you can afford the mortgage repayments by showing the provider:

Details of your income and outgoings
Any debts, such as loans or credit cards.

Find out about mortgage eligibility in detail in our guide to increasing your chances of being approved for a mortgage.

How much can I borrow with a 95% mortgage?

This will depend on your personal circumstances. Mortgage providers typically lend from four times up to four-and-a-half times your salary, though some may offer up to five times. If you’re basing the mortgage on two incomes, it could be slightly less than that.

For example:

You’re looking to buy a home worth £250,000
A 5% deposit would be £12,500
You’d need to earn around £60,000 a year to get a 95% mortgage on the remaining £237,500.

Alongside your income, lenders will also look at your outgoings and your all-important credit score.

You’ll also need to consider the other costs that you’ll have to pay when buying a property, including:

Mortgage providers have different criteria for accepting applicants. If you’ve been turned down for a mortgage before, this doesn’t mean you won‘t qualify next time.

If you want a rough idea of how much you might be able to borrow with a 95% mortgage, check out our mortgage calculator.

How do I apply for a 95% mortgage?

You can apply for a 95% mortgage:

Through a mortgage broker or
By contacting the mortgage lender directly.

Many high-street banks currently offer 95% mortgages. But it’s a good idea to compare mortgages to see what’s available rather than just asking your bank.

You’ll need to go through the same affordability and credit checks as you would with any type of new mortgage. So it’s worth getting organised and making sure you’re eligible before you start the process.

Compare 95% mortgages

When you search for mortgage deals with us, we’ll do the hard work for you. Just tell us how much the property’s worth and how much you want to borrow, and we’ll show you what’s on offer. Compare now and find a mortgage deal that suits you.

If you need help getting a 95% mortgage, we’ve partnered with L&C Mortgages Ltd** to provide you with fee-free mortgage advice.

Get in touch with one of their advisers who can give you fee-free advice to help you choose the right mortgage for you.

Go to L&C mortgages

About L&C Mortgages Ltd

**L&C Mortgages Ltd are a multi-award winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).
L&C are not part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner L&C earns. All applications are subject to lending and eligibility criteria. L&C will not charge you a broker fee should you decide to proceed with a mortgage.

Frequently asked questions

Should I save for a bigger deposit?

If you can manage it, saving for a bigger deposit could be a smart financial move:

The more you can put down upfront, the more mortgage deals you’ll have to choose from – and the better the interest rates tend to be
Having a lower interest rate could mean paying less in the long run.

On the other hand:

While you’re busy saving, house prices might keep climbing. These increases might cancel out any savings you can make on lower interest rates.
If you continue to pay rent while you save, you may prefer to put that money into your own home instead.

It really comes down to what works best for your finances, your timeline, and your goals. Weigh it all up and make the choice that feels right for your circumstances.

Learn more about how to save for a mortgage deposit.

Which banks offer 95% mortgages?

Thanks to the mortgage guarantee scheme, many of the UK’s leading banks are now offering 95% fixed rate mortgages to eligible buyers. These include:

Barclays
Halifax
HSBC
Lloyds
Nationwide
Natwest
Santander
Virgin Money
Co-operative Bank
Yorkshire Building Society
Royal Bank of Scotland

Correct as of May 2025.

Can you get a 95% mortgage on a new-build home?

Yes, some lenders are offering 95% mortgages on new-build houses.

What is the Deposit Unlock scheme?

The Deposit Unlock Scheme is a collaboration between the building industry and lenders which makes it easier for lenders to offer 95% mortgages on new homes.

It offers participating mortgage lenders protection on their mortgages, so that they can lend at 95% on new-build housing.

To take part in the scheme:

Find a participating developer
Find a home you want to buy
Talk to the developer to confirm that the chosen property is available under the Deposit Unlock scheme.

Can my family help me get a 95% mortgage?

Yes, a family member could act as a guarantor to help you get a 95% mortgage. It means they’ll agree to cover the repayments if you can’t make them.

Having a mortgage guarantor can help you access better interest rates, but there are certain conditions. For example:

Your guarantor must own their home outright or, at least, have plenty of equity in it
They’ll also need to show they can afford your mortgage payments, as well as any of their own.

If you're fortunate, another way your family might help is by gifting or lending you the deposit – often nicknamed the Bank of Mum and Dad.

This could cover the minimum 5% needed and get you over the line.

Can I remortgage with a 95% mortgage?

It’s possible to remortgage onto a 95% mortgage deal if your finances are in good shape. But it’s sensible to talk to a mortgage broker as your choice of lenders is likely to be limited.

If you already have a 95% mortgage and are looking to remortgage to a better deal, it may take a while before it’s possible.

If your property value jumps up, then it might be worth moving to a new mortgage with a lower LTV once your current deal ends
But if prices fall, there’s a risk your mortgage could end up being bigger than your home’s worth.

If your home drops in value, you might not be able to remortgage. This means you’ll move on to your lender’s standard variable rate (SVR) when your current deal finishes.

What is LTV?

LTV stands for loan to value, which is the percentage of the mortgage in relation to the property’s value. So, if your property is worth £260,000 and your deposit is £13,000, your £247,000 mortgage would give you a loan to value of 95%.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax paid when you buy property over a certain value in England and Northern Ireland. In Scotland it’s called the Land and Buildings Transaction Tax, and in Wales it’s called Land Transaction Tax with rates set locally.

Several things can affect the amount of stamp duty you’ll need to pay, including:

Which country within the UK the property is situated
The price you pay for the property
If you’re a first-time buyer
Whether you already own another property.

To work out how much you’ll need to pay, use our stamp duty calculator.

Is shared ownership a good alternative to 95% mortgages?

Whether shared ownership is a good alternative to 95% mortgages depends on your circumstances.

On the one hand, it can be a useful way to get on the property ladder. This is because the mortgage you needed is calculated on the share you’re buying, not the property’s full market value.

Here are a few things to consider when it comes to shared ownership:

You’ll need to be eligible
You’ll need to do the sums to be sure the scheme adds up for you
In some shared ownership developments, preference is given to applicants who already live or work in the area
There may be less choice about the property available to buy