95% Mortgages: Is There A Catch?

There was a time not too long ago when a person could borrow 100% of the cost of a home without much hassle. When that went away, people started going with 95 percent mortgages. Today these mortgages are only available to first time buyers and existing homeowners/borrowers. Otherwise, if you do find one of these deals there is usually some kind of catch. For instance the interest might be higher or you need more security to put up to borrow the money.

First time home buyers have an easier time getting a 95% mortgage. As an example, Lloyds has an offer for first time home buyers for 95 percent mortgages that comes with a three year fixed interest rate of 4.39% and a fee. The disadvantage to this program is that if the buyer wants to use this mortgage option you have to come up with the up front 5% deposit and another 20% aid from your friends and family. The total deposit is actually 25% with this offer.

Some of the banks that offer 95 percent mortgages include Ulster Bank, Lloyds TSB, Newberry Building, Bank of Ireland, RSB, C&G, Halifax, NatWest, Northern Bank and National Counties. Most of these lenders include a fixed rate. These are only for first time buyers and for people with existing loans and homes to put up for security. Many homeowners use these loans to make home improvements because even after the deposit and payments it is less than trying to get a personal loan.

There are also other mortgage options like 90% which has taken the place of the 95% and the 100% mortgages. The credit and housing crunch has caused these problems for people that are not first time home buyers and those without existing mortgages with a bank that offers these financing solutions.

Changes happen quickly in this arena, so if you are mortgage shopping you really need to look at the fine print before you choose one for your needs. You want to especially examine any 95 percent mortgages offers you see to find the hidden criteria. Things in this area are starting to look up, so these 95% mortgages could make a come back and provide affordable financing for most all home buyers.