95 LTV Mortgages

95 LTV mortgages are a great way to reduce the burden of a costly mortgage deposit. LTV refers to loan to value ratio and essentially is another word for the amount of money a lender pays towards a property. So if you have 95 LTV on your mortgage it simply means that your lender is going to pay for 95% of the property you want to buy. This means that you will get a low mortgage deposit of 5 percent. The reason these sorts of mortgages are so desirable is because they mean that borrowers do not have to hand over a huge lump sum of money to mortgage lenders as part of their deposit.

The average LTV of a mortgage is around 75 which means that prospective borrowers will have to make up the remaining 25% of the money needed to buy a property. Considering properties often cost hundreds of thousands of pounds, a 25% deposit can take years to get before they have built up enough money. Mortgages that have a 95 LTV avoid this problem by allowing borrowers to only give their lenders 5% as part of their mortgage deposit. This means that borrowers can built up the money they need for their deposit a lot easier.

Drawback of These Mortgages

The large drawback of these sorts of mortgages is that they incur large interest charges. Lenders are taking a lot more risk by paying for 95% of a property because the losses they would face in the event that a borrower default on their repayments is are quite large. To make up for this increased risk, mortgage lenders hike up the interest rates on their 95 LTV mortgages so they can make more money from borrowers every month and reduce the losses they would make in the event of a default. This means that although the initial amount of money you will pay when getting a 95% mortgage will be low, overall you may be paying more than you would normally do due to the high interest you are charged and the longer amount of time you are likely to take to repay your lender. Despite this many, people prefer to go for 95% mortgages because they are unable to get the large amount of money they need to pay a hefty mortgage deposit.

Finding a 95 LTV Mortgage

If you want to find a lender that offers 95 LTV mortgages, you should go online. Generally 95 LTV mortgages are quite rare due to the amount of risk they pose to lenders, but with the use of the internet you should be able to find a few lenders that offer them. With the use of comparative websites and mortgage calculator websites you should be able to find a number of different lenders that offer 95 LTV mortgages and work how much each offer will cost you in monthly payments. With the use of comparative websites you can find out the different interest rates being charged on 95% mortgages from a range of lenders.

Once you know the interest rate that is attached to a 95 percent mortgage offer you can use an online calculator to work out how much the mortgage would cost you every month in payments. All you have to do is enter in the amount of money you are borrowing, the amount of time you are going to take to repay the money and the interest being charged to your mortgage into an online mortgage calculator. With this information the online calculator will be able to give an estimate of your 95 percent mortgage monthly cost.

Getting Your Mortgage

To find the best lender you simply have to pick the one which offers 95 LTV mortgages with the lowest interest rate. Although the interest rate attached to a 95 LTV mortgage is likely to be fairly high, you can still find lenders that offer cheaper 95 LTV mortgages than others, all you have to do is research for a lot of lenders online. Why not check out what a few offers would demand in monthly payments by working out each one of their monthly costs with the use of an online calculator.

Once you have found the lender who offers the cheapest 95 LTV mortgages, you should be able to apply directly to the mortgage from the internet. The application process for 95 LTV mortgages is no different than any other type of mortgage. You will need to give your prospective lender some details about the property you want to buy and the amount of money you want to borrow. After a week or so your prospective lender should get back to you and let you know whether you have been approved for the mortgage or not.