5% deposit mortgages.

Loan to value is simply a ratio of the amount you need to borrow against the amount you have saved up as a deposit. It’s worked out as a percentage, so whilst a 95% LTV mortgage for a £400,000 property would need a 5% deposit of £20,000, if you’re taking your first step onto the housing ladder with a £100,000 flat the 5% deposit would amount to £5,000.

When purchasing a property you will generally need to pay an amount from your own funds in addition to borrowing money through a mortgage. In some circumstances, you may be able to use a gifted deposit from a family member.

A deposit could also refer to existing homeowners who are purchasing a new property, or remortgaging, with a small amount of equity in their current property. That equity would make up the deposit amount, along with any additional funds they wish to put forward.

The amount of deposit you will need will vary depending on the price of the property you want to buy, and the amount you are able to borrow through a mortgage.

The monthly repayments will vary depending on a number of factors, primarily how much you are borrowing, how long for and what the interest rate is. To get an idea of what your monthly repayments may be, you can use our handy mortgage finder to find a potential mortgage then look at our mortgage repayment calculator for an indication of what your 95% LTV mortgage will cost.

It’s worth bearing in mind that with mortgage deals for higher loan to values, such as 95% LTV, you may be paying more to borrow the money than you would if you can save up a larger deposit. Generally, the more deposit you have, and the lower the LTV, the more competitive mortgages you will be able to access.

Getting a mortgage is not just about how much you can borrow. Mortgage lenders need to ensure the mortgage is affordable and an acceptable risk – for both parties.

This means when you approach a lender:

• they may perform a credit check on you. This takes a look at your credit history, any outstanding loans or credit cards you might have and assesses how ‘good’ you are at managing your money.
• they’ll also ask you for full details of your income and your financial commitments and expenditure, so an affordability assessment can be carried out.

Regardless of whether you speak to us or another lender, we all have a responsibility to make sure that the mortgage you want is affordable and that you have enough income to cover the mortgage repayments, even if your circumstances or your interest rate were to change in the future.

This will entirely depend on your own circumstances, so it’s best to do your sums thoroughly. You could also consider speaking to an independent financial advisor.

It’s worth remembering that, with a capital & interest repayment mortgage, your monthly mortgage repayments will mean you’ll gradually own more and more of your property – which should eventually result in you owning your property outright, as long as you have made all of your repayments in full.

If you have been gifted funds for your deposit from a family member you may need to save up additional funds of your own in order to get a mortgage. Read all about gifted deposit mortgages.