Whether you’re buying your first place, or moving home, a 90% LTV mortgage is a pretty good place to start. By putting down a deposit of 10% you can access better mortgage products with lower interest rates than if you only had a 5% deposit (95% LTV) – but the trade off is that it’s harder to save up a large amount of cash.
What is a 90% LTV mortgage?
It’s a mortgage where you borrow 90% of the cost of the home you want to buy. The remaining 10% has to come in the form of home equity, or big chunk of cash – a deposit.
For example, if you’re buying a £400,000 property, you’d need a deposit (or equity) of £40,000 to hit an LTV of 90%. The remaining £360,000 would be lent to you by the mortgage provider.
Now read: What is LTV or loan to value?
Buying your first home with a 90% mortgage
As a first-time buyer with an LTV of 90%, you will have access to mortgage products with competitive interest rates that save you thousands of pounds in interest payments versus 95% and 100% mortgages.
Read our complete mortgage guide – and then go buy your first home!
Remortgaging or moving home with a 90% mortgage
If you’re moving home or remortgaging, and you have a positive home equity of at least 10%, then you can get a 90% LTV mortgage.
For example, if you owe £400,000 to your mortgage provider, but your home has gone up in value to £450,000, then you have a positive equity of £50,000. You can use that equity to get a new mortgage, rather than having to save up a deposit. Or if you do have savings, you can add those to the equation and reduce your LTV even further. If you can reduce your LTV to 85%, 80%, or even lower, then you’ll be offered some very desirable interest rates by mortgage lenders.
You can usually find out how much you owe your mortgage provider by looking at your most recent statement – or alternatively, just phone them up and ask. You can find out the rough value of your home by doing some research online – or ask an estate agent for a valuation.
Now find out the max mortgage you can get – or read some tips on increasing the value of your home