Lenders 95% mortgage deals – are they too expensive?
Over the last 2 years the number of 95% mortgage deals available has increased. Currently there are around 58 deals on offer from 22 lenders, which compares favourably with last year when just 29 95% deals were on offer.
However relatively few buyers are being approved for a mortgage with just a 5% deposit. It is being suggested by some market experts that not only are 95% mortgage deals hard to achieve that are also not the most sensible product.
Having a larger deposit of 10% to 15% can make a large difference to both the mortgage rate you can achieve and the monthly repayments you will need to pay.
In general 95% mortgage rates are currently anywhere between 5% and 6%, far lower rates are on offer to those who have a larger deposit. Some of the deals on offer require a guarantor who agrees to pay if you default on your mortgage.
There was a time when 95% mortgages were a standard product available to all house buyers, however with tightened lending criteria deals are tougher to get.
Since the start of the banking crisis in 2007 banks have had less money to lend. As those with a small deposit are considered higher risk, lenders are required to provide a larger cushion against mortgage default. Smaller deposit mortgage deals have been severely rationed as a result.
To help small deposit buyers the Government introduced the NewBuy scheme. It is hoped that its introduction will greatly improve the chances to buy for those with a 5% deposit.
For the most competitive mortgage deals currently on offer contact Deal Direct.
