85% LTV Mortgage
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85% Loan To Value LTV Mortgages
If you’re looking for an 85% LTV mortgage for your next home, our expert advisers are here to give you the mortgage advice you need. We can compare mortgage deals from across the whole market and will point you towards those that are right for your personal circumstances.
As we are a fee-free mortgage broker, you won’t have to pay a penny for our services. We are passionate about helping you save money throughout your mortgage journey so contact us to learn more about what we can do for you.
What Is A Loan To Value Mortgage?
A loan to value (LTV) mortgage is the size of the loan relative to the value of the property’s purchase price.
Such mortgages are always expressed as a percentage and are offered in 5% increments. So, when searching the market for mortgages, you will notice lenders offer a range of LTV deals, from 60% upwards.
If you were to opt for a 60% loan to value mortgage, for example, you would need to put down a deposit of 40% of the property value. If you weren’t able to afford this, you could opt for something with a higher LTV, such as a 90% LTV mortgage, and pay only 10% of the purchase price.
There are a range of other mortgages you may be eligible for depending on how much deposit you are able to put down.
What Is An 85% Loan To Value Mortgage?
An 85% LTV mortgage lets you borrow 85% of the property value. Therefore, you would only need to put down 15% of the purchase price as a deposit.
Example: 15% deposit mortgages on a £200,000 home
If you qualify for an 85% LTV mortgage, you would only need to pay a 15% deposit.
So, if the property was valued at £200,000, the amount of money you could borrow would be £170,000. You would need to pay a deposit amount of £30,000 as this is 15% of the property price.
Can I Get An 85% LTV Mortgage?
You will be eligible for an 85 LTV mortgage if you have the financial ability to put down a 15% deposit.
However, you would also be subject to the mortgage provider’s lending criteria so there is more for them to consider than just the deposit amount you are able to make.
When deciding on whether to give you a mortgage or not, the mortgage provider will consider such things as your…
So, while you may be able to get a mortgage with a 15% deposit, you would need to pass the lender’s other checks first.
Best 85% LTV Mortgage Deal
As a whole of market mortgage broker, we have access to the thousands of deals that are available from both high street and specialist lenders on the mortgage market.
These deals include the 85 % mortgages that are currently available and after getting in touch with us, we will point you towards those deals that are right for your needs.
When comparing mortgages, it is important to take the following into consideration.
When looking for the best mortgage deal, you have a choice between fixed-rate and variable-rate mortgages. The monthly repayments on your mortgage will differ depending on which type of loan you go for, as you may be subjected to a higher or lower interest rate.
Fixed-rate repayment mortgage
With a fixed rate 85 LTV mortgage, the interest rate will remain the same during your mortgage term. This can give you peace of mind as you won’t have to worry about the interest rate suddenly going up over time.
Of course, you won’t benefit if the interest rate does go down but you could always remortgage if you want to move to a fixed-rate deal with a better mortgage rate. However, if you decide to do this before your current deal ends, you may have to pay your lender’s early repayment charges. As such, it is sometimes better to make the switch when your existing deal is about to come to an end, as you will then avoid your lender’s standard variable rate (SVR), which can often be quite high.
Variable-rate mortgage repayment mortgage
With a variable rate mortgage, you may benefit from lower interest mortgage rates, at least initially. But as interest rates rise and fall in line with the Bank of England’s base rate, you may have to pay interest at a higher rate at some point during the term of your mortgage. As such, you shouldn’t always choose a mortgage based on the initial rate of interest.
85% Mortgage Fees and Incentives
When considering the overall cost of your mortgage, it is important to factor in the various fees that your mortgage lender will charge you. We can explain these and other fees to you so you won’t have to worry about any nasty surprises when applying for your mortgage.
Typically, these will include the arrangement fee, application fees, booking fees, valuation fees, and a range of other fees associated with your mortgage.
It is advisable to check the Annual Percentage Rate of Charge (APRC) before looking at mortgages as this is one way to learn about mortgage-related fees in advance. However, we can discuss these and the various moving fees you may have to cover when you come to us for a consultation.
Cashback and incentives
When you compare mortgages online or on the high street, you will notice that some lenders, as well as offering cheaper mortgage rates, will also offer cashback on completion. So, while you may have to pay a £450 arrangement fee on a repayment mortgage product, you can expect to be better off at the end of your deal if the cashback offer is much higher than this.
So, when it comes to the overall cost of your loan, some deals will be more attractive than others. Talk to our team to learn more about the cashback incentives currently available and find out about the other offers that mortgage providers are offering at the moment.
Assessing Your Affordability
When applying for a mortgage, your lender will carry out a ‘mortgage affordability check.’ This is because your lender will want to make sure you can make the repayments on your mortgage and offset any risk to themselves.
As part of the check, your income and expenditure will be taken into account, and you will be asked to provide evidence of this. They might ask to see your payslips and utility bills, for example, as well as details of any loans you hold.
This might sound daunting but remember that they are doing it to help you. It might be that you are ineligible for some mortgages because of your affordability rating but if this means you aren’t put in financial jeopardy later, it will work out better for you.
If you want to improve your mortgage affordability, there are a number of things you can do before you make your application. By taking these steps, you will improve your chances of a successful application and you may reduce the overall cost of your mortgage.
Find ways to reduce your common expenses.
Clear any outstanding debts
Save up for your deposit
Do what you can to attain a good credit score
Stop unnecessary spending
Compare 85% LTV (15% deposit) mortgage deals
There are over 90 different banks and building societies in the UK offering over 14,000 different loan to value deals. To make sure you get the right mortgage, you should find ways to compare the deals that are currently available. You can do this in the following ways.
Search Deals From Banks and Building Societies
Your existing bank or building society may be able to offer you a mortgage but will you be getting the best deal? It’s often important to shop around as you may get a better deal elsewhere. However, with so many mortgage lenders out there, it will take you forever to contact each one, so this might not be the best option for you, especially if you don’t have a lot of time to spare.
Using Online Comparison Tools
There are lots of online comparison tools available so you don’t need to ring around each bank or building society in turn. However, while you might get an idea of which deals are better than others when taking up this option, it’s important to note that some comparison websites are biased. This is because some mortgage companies will pay them to list their products higher on result pages so you might not see the best deals that are available. Therefore, we recommend the option below.
Benefit From Fee Free Mortgage Brokers
This is by far the best option. We will compare all home mortgages on your behalf so you won’t have to waste time and money exploring every deal on your own. And we will make sure that you get an 85% LTV mortgage deal with the most attractive interest rates after exploring your options with you.
As we offer an unbiased service, you can also be assured that when we say we have found the best deal for you, we mean it! We have your best interests at heart, so will take your needs into account at every step during your mortgage journey. And as we don’t charge you for our services, this is one fee you can eliminate when listing your mortgage expenses and all those other fees that you have to pay when moving.
Should I Get An 85% LTV Mortgage?
There are many mortgage types available but if you’re looking for something with less interest, you should consider a lower LTV that requires a larger deposit.
But if you don’t have the financial means to save up for a bigger deposit, an 85 LTV mortgage could be the best option for you. We can discuss this and all other options with you but keep reading to learn more about this type of mortgage and whether or not it might be right for you.
Affordability & eligibility criteria
Affordability & eligibility criteria
When deciding on whether to give you a mortgage or not, you will have to pass the mortgage provider’s lending criteria. They will take such things into account as:
Your credit rating
Your income and expenditure
Your employment status
The size of your deposit
If you pass the lender’s affordability and eligibility criteria, then you may decide on an 85 LTV mortgage.
But while you may be offered such a mortgage by the lender, you need to consider your affordability too. Not only will you have to pay off the mortgage capital and the expected interest rates, but you will have to budget for the lender’s fees too. Then there are all the other expenses you have to pay for in your day-to-day life, such as your utility bills.
If you suspect you may have financial difficulties in the future, you might want to consider a higher LTV, such as 90% or 95%, as this way you won’t have to pay a larger deposit. Or you might want to consider a lower LTV, such as 70% or 80%, as you will benefit from a lower mortgage interest rate.
To discuss all of your options, get in touch with a member of our team. We will help you make the right decision so you don’t face financial jeopardy in the future.
85% LTV Mortgages For First Time Buyers
Most lenders offer these types of mortgages to first-time buyers so if you can afford the deposit, this type of mortgage could be an option for you when trying to get on the property ladder.
If you can’t afford the deposit, you might want to consider a 90% or 95% LTV mortgage instead, although you will be subjected to a higher interest rate.
If you have time to save for a bigger deposit, you might want to consider a lower LTV, such as an 80% deal, as you would reduce the total cost of your mortgage amount.
85% LTV Mortgages For Home Movers
If you own your home and are thinking about moving into a new property, you may be eligible for an 85% loan to value LTV mortgage, provided your property isn’t in negative equity.
The equity in your existing home will need to be at least 15% of the value of the new property although you can save up for a deposit if there is any shortfall.
If your home is in negative equity, you may find it difficult to get a mortgage. However, if you are able to raise a deposit for a new property, you may still be able to get an 85 LTV mortgage. Alternatively, it may be best to wait until the equity in your home has increased. This way, you won’t have to raise an excessive amount of money to pay for a deposit and you will have a better chance of having your mortgage application accepted.
How to avoid an early repayment charge
If you are on a tracker mortgage or on your current lender’s standard variable rate (SVR) of interest, you won’t be subjected to an early repayment charge.
However, if you are on a fixed-rate deal and want to switch to a new mortgage before your deal ends, you will usually be liable for early repayment charges.
It is possible to avoid an early repayment charge if you postpone your move until your existing deal is almost at an end. You could then time your move with a new mortgage product.
Alternatively, you could port your existing mortgage to your new property. Many lenders will allow for this so it is worth considering this option if you are currently happy with the deal you are on.
We can give you more advice on early repayment charges if you are thinking about moving home, so get in touch with our team.
85% LTV Mortgages On New Build Homes
These mortgages are available to home buyers wanting to buy a new build home but if you aren’t able to meet the deposit requirements, some lenders now offer 90% mortgages on these property types too. However, you won’t be able to get a new build flat with a 90% LTV mortgage as the maximum LTV for these properties is 85%.
85% LTV Mortgages On Buy-To-Let Properties
The maximum LTV on a buy-to-let property is 85% so you would be eligible for this type of loan if you’re a property investor.
Remortgaging Onto An 85% LTV Deal
Remortgaging is a good idea if you want to raise equity or avoid your lender’s standard variable rate (SVR) of interest and move on to a better mortgage deal.
Most lenders will let you remortgage onto an 85% LTV deal so this is something to consider if you are currently thinking about making the switch.
However, while you will be financially better off after avoiding your existing lender’s standard variable rate, you might want to consider a lower LTV when making the transition. This is because you will make more savings after securing a better rate of interest and lower monthly repayments.
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