Are 95% Mortgages Really Available?

thegirlintheattic

My partner and I are now ready to start looking at buying our first home, we are in our mid to late twenties. We have very secure, stable jobs with a joint income of over £50K a year, which is guaranteed to raise in 2 years to £69K (pay scale progression). We are looking at houses in the £140K - £180K price range and will have a gifted deposit of 5%.

Apart for new builds there do not seem to be many 95% mortgages available (at least not from mainstream lenders) and we were too late for the last NewBuy property in our area . We've come across the Nationwide save to buy scheme which we are going to start up. Is their any realistic chance of getting a 95% mortgage? If so from where?

We are hoping to save up another 5% by April/May time next year, although we would like to buy as soon as possible in the New Year to save on throwing money away on rent and save money on commuting costs. Even then it would be helpful to have a 95% mortgage so the saved money could go on fees.

MagicCats

You're problem will be the fact your deposit is gifted; lenders like to see savings. So the idea of saving another 5% is spot on. That's what my partner and I did.

With regards to 95% mortgages some of the smaller building societies were offering. Skipton was for sure, but many have now withdrawn from the market. Your credit history needs to be perfect, and the rates are high. But if needs must those are the people to start looking at.

It sounds like you're in a good position, why not save up to 15% and then things really open up. Not easy I appreciate, but it will make life much easier.

opinions4u

thegirlintheattic wrote: »

My partner and I are now ready to start looking at buying our first home, we are in our mid to late twenties. We have very secure, stable jobs with a joint income of over £50K a year, which is guaranteed to raise in 2 years to £69K (pay scale progression)

We are looking at houses in the £140K - £180K price range and will have a gifted deposit of 5%.

Serious question. What the hell do you do with your income? What do you have to show for it?

Apart for new builds there do not seem to be many 95% mortgages available (at least not from mainstream lenders) and we were too late for the last NewBuy property in our area . We've come across the Nationwide save to buy scheme which we are going to start up. Is their any realistic chance of getting a 95% mortgage? If so from where?

They are few and far between. The lenders that do offer them target them at squeaky clean credit ratings and existing customers.

We are hoping to save up another 5% by April/May time next year, although we would like to buy as soon as possible in the New Year to save on throwing money away on rent and save money on commuting costs. Even then it would be helpful to have a 95% mortgage so the saved money could go on fees.

95% mortgages tend to be very expensive and lacking in choice. Getting a 10%-15% deposit together will open far more doors.

Showing a lender that you are capable of saving your own deposit gives them confidence that you are committed to your mortgage.

thegirlintheattic

Our new higher income is from promotion and a new job, so we are only just getting it. Before we were on a very modest income which I had saved and spent most on a deposit for a decent car, and my partner had saved his and spent it on a car outright. These were both necessary to get us to and from work. With our new income a mortgage is affordable even at 95% rates - mortgage would be about 25% of our net monthly income. We had originally planned to buy in two years and were looking at that for a savings goal, which is why we spent savings on cars. However our rental being for sale (so we may get notice at anytime) and our current position, combined with the fact the market is now near rock bottom, is prompting us to look at buying sooner than we had planned.

We both have good credit ratings with no late payments etc. We are both long standing customers of two banks and have both had substantial savings in the past that paid for our post-graduate education (in both cases well over £20K) - so hopefully our banks would be able to see we are more than capable of saving.

Looks like we will have to wait a bit to save up the extra 5%. We don't really want to wait another year + for a 15% + deposit as we are currently in a rental property that is for sale. We'd rather be the ones to decide to move, rather than be forced out into whatever is available at the time to rent (not many decent rental properties around here).

pvt

thegirlintheattic wrote: »

.....which I had saved and spent most on a deposit for a decent car.....

So it sounds like you have a car finance commitment as well. That's not really going to help.

Your comment that you have had very recent "promotion" and "a new job" may not be interpreted by lenders as "very secure, stable jobs" as you describe them.

As others advised - save for a while, it has a double benefit, you'll have more cash so need a lower LTV, and it'll show you're capable of budgeting and saving.

thegirlintheattic

I do have a small amount of car finance but when I spoke to my bank Saturday morning they said this would be fine if we were going through a mortgage with them as it is a tiny part of our joint outgoings. Don't like the insinuations on here that we cannot save and budget, we have done this for many years. As I've said before, up until recently we both had significant savings, timing has just worked against us that at the moment we are down to our last few k in those accounts.

My promotion moved me from part-time to full-time - I'm a teacher so a very stable job.

My partner has gone from sub-contracting for a company to being staff. It is a very stable job, pretty much a job for life due to his specialism and the length of projects.

Looks like we'll be saving for the next 6 months then.

opinions4u

thegirlintheattic wrote: »

Don't like the insinuations on here that we cannot save and budget, we have done this for many years. As I've said before, up until recently we both had significant savings, timing has just worked against us that at the moment we are down to our last few k in those accounts.

Five years ago I wouldn't have batted an eyelid at somebody with little to no savings who wanted a mortgage.

But the mortgage market is very different today. Those with deposits are king. They get the pick of the lenders and the pick of the deals from those lenders.

No deposit = no mortgage.

5% deposit = very expensive mortgage.

I'm not insinuating that you can't budget or save. I am suggesting that you are putting yourselves in a position that seems hurried and, as a result, will cost you more in the long run.

A mortgage underwriter will be asking similar questions though. It doesn't matter what people on a forum think. But it does matter what a mortgage underwriter reviewing your application thinks.

My promotion moved me from part-time to full-time - I'm a teacher so a very stable job.

Although government may, at some point, bite the bullet and increase class sizes / reduce teacher numbers. Probably not this side of an election though. Probably achievable through natural turnover. Hopefully.

My partner has gone from sub-contracting for a company to being staff. It is a very stable job, pretty much a job for life due to his specialism and the length of projects.

I got a dead secure job when I was 18. But the world changes at a remarkably rapid rate. Don't assume the job or health will last forever.

Looks like we'll be saving for the next 6 months then.

Go for it. And good luck. It feels a lot better if you've got your own stake in a new home.