Stuart Bowman
3-minute read
Last updated: 4th August 2020
Mojo Mortgages has been voted the UK's best mortgage broker. Let's get you the best rate you can... for free, all from the comfort of your sofa.
Get StartedLTV is one of the many pieces of jargon you’ll come across when you’re looking at getting a mortgage. It stands for Loan-to-Value and it’s a lot simpler than it sounds.
In this guide we’ll explain what LTV is, how it works and what it means for you if you’re getting a mortgage.
LTV is the percentage of a property’s value you borrow after chipping in your deposit.
For example, you could be eyeing up an apartment worth £160,000. You put down £40,000 (25% of the property value) for a deposit. You then need a mortgage for the remaining £120,000 (75% of the property value). This gives you an LTV of 75%.
The lower your LTV, the lower your monthly mortgage repayments are likely to be.
Lenders generally ask for at least a 5% deposit, so the maximum LTV is typically 95%. 100% LTV mortgages do exist, but they’re hard to come by and have strings attached.
Bigger loans carry more risk. It’s understandable: the lender is putting more cash into the purchase than you and wants to know they’ll be paid back.
Interest rates tend to be lowest when you reach 60% LTV. This goes for fixed rate, tracker and variable rate mortgages.
As a hypothetical example, your opening fixed rate on a 60% LTV mortgage could be around 1.2% interest, eventually rising to 3.8% when the term ends and you’re moved on to a Standard Variable Rate (SVR).
As you scale to the 70-80% LTV level, you’ll be paying more interest. The fixed rate might be more like 1.59% before it moves up to a 4.7% SVR. It’ll be different from lender to lender. Of course, 90-100% LTVs come with the highest rates.
Our Mortgage Matcher can show you what your monthly repayments could look like at various LTVs. Try entering different deposit amounts and property values to see what could be available to you. Click here and choose ‘new mortgage’ or ‘remortgage’ to begin.
We search 90 lenders and 20,000 products to show you your best mortgage deal. Go find it!
Get my best rateHere are a few other articles you may find useful.
Best can mean anything depending on what you need, but if you want lowest mortgage rate from each of the lenders? Here you go
There's nothing stressful about a mortgage adviser meeting, but if you want to be prepared, find out what will happen first, here.
See the mortgage adviser questions... and know how to answer them
Sorted. We can do everything you need and in a few minutes you'll have a a handy document to show the estate agent when making an offer.