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Lieke Braadbaart

Online Writer
Published: 30/05/2018
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First-time buyers certainly don't have it easy, but our latest research finds that they are getting some help. While many mortgage rates have continued to rise despite base rate remaining on hold, the average fixed rates over two and five years at 95% loan-to-value (LTV) have bucked the trend.

Welcome rate decreases

Charlotte Nelson, finance expert at, reports that "the average two-year fixed rate at 95% LTV has fallen from 4.11% at the start of the month to 4.06% today, while the five-year fixed rate is now priced at 4.43% after a 0.06% drop. As a result, both rates are now lower than they were at this time last year."

Rates for those with just a 5% deposit did rise prior to the base rate announcement, as did most other rates, especially when it was widely thought that base rate would go up this month. However, while "the rest of the market has continued on its upward trajectory", Charlotte said that "the higher LTV products seem to be forging their own path."

Some of this welcome activity could be explained by lenders wanting to bring new borrowers on board, to revitalise their mortgage book. "And it is not just rates providers are using to attract these new borrowers, as an array of different incentive packages and fees means borrowers can now tailor their mortgage to suit their needs," Charlotte added.

However, borrowers should bear in mind that rates at 95% LTV are still higher than those at 90% LTV. Indeed, by saving an extra 5%, borrowers could save a whopping £141.82 per month (based on a £200,000 loan over 25 years), when comparing the average two-year fixed rate at 90% LTV of 2.74% to the average 95% LTV equivalent.

Top tips

Even if you can't afford that 5% extra, there are still things you can do to make life a little bit simpler while you go through the mortgage process. Specifically, Charlotte has some top tips to share:

  • Do the maths. "Once you know where you want to live, it is worthwhile checking the house prices in that area to see what LTV mortgage you will need. A mortgage calculator will help you work out what your monthly repayments could be, which can help you see if what you're looking at is actually affordable. It is ok to go back to the drawing board and continue saving if you feel it's not quite manageable."
  • Consider what deal you want. "There are different types of mortgages for varying lengths of time, and all have their benefits. Which type you opt for is dependent on how cautious you are", among other things. You can find out more about the different mortgage types in our guides.
  • Check your credit score. "Providers will use your credit score to decide whether to lend you money. You will need a good score to qualify for the best deals on the market. So, it is wise to check your score and fix any errors to ensure you get the best deal."
  • Sort the paperwork. "Your mortgage application will require a lot of paperwork, so to avoid all the panic later on, you can try to get everything in order before you apply. Usually you will need about six months' worth of old bank statements, your payslips and your latest P60."
  • Consider all costs. "First-time buyers may no longer have to pay stamp duty on their homes, but other costs such as legal fees, survey and valuation fees and even moving costs can still mount up."
  • Shop around. "It is essential that you look around to find the best deal. Try not to get sucked in by low headline rates; instead, look at all aspects of the mortgage."
  • Don't ignore advice. "It can be tricky when it's all new to know if you have found the most suitable deal for you. A financial adviser can help you not only pinpoint the best deal for you, but guide you through the application process as well, making the challenging procedure easier for first-time buyers."

If you've got your deposit all sorted and are ready to take the plunge, Charlotte warns that "With rates still increasing in other sectors of the market, only time will tell how long the 95% LTV tier can continue to buck this trend. So, borrowers considering getting on the property ladder should look at the options now before they miss out on the lower rates."

What next?

Have a look at the first-time buyer chart or search through the best mortgage deals to get an idea of what's out there. If you're not yet ready, consider using a lifetime ISA or Help to Buy ISA to help you over the deposit-saving finish line and into your first home.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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