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90% LTV mortgages
What is a 90% loan-to-value mortgage?
A 90% loan-to-value (LTV) mortgage in the UK is a type of mortgage that allows borrowers to potentially borrow up to 90% of the value of a property they want to purchase, while they provide a deposit of only 10%. This can be a great option for those who are struggling to save up for a larger deposit, especially with the current high property prices.
However, it’s important to keep in mind that even with a 90% LTV mortgage, a 10% deposit can still be a significant amount of money. For example, if you’re looking to buy a house that costs £300,000, you would still need to come up with a deposit of £30,000, which is no small sum.
Loan to value mortgages explained
When you’re applying for a mortgage, you’ll often hear the term “loan-to-value” (LTV) being used. In simple terms, LTV is a ratio that represents the amount of money you want to borrow compared to the value of the property you’re looking to purchase.
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How to calculate loan to value
To calculate the loan-to-value ratio, you simply divide the amount of money you want to borrow by the value of the property you’re looking to buy, and then multiply by 100 to get a percentage. For example, if you want to buy a property worth £200,000 and you need to borrow £150,000, your LTV ratio would be 75%: (£150,000 ÷ £200,000) x 100 = 75%.
Example:
If you were to buy at £300,000 at 90% LTV a you would require a £30,000 deposit and need a £270,000 mortgage on the balance.
Best 90% LTV mortgages
When it comes to mortgage loan-to-values, there are many options available, and various factors will determine which one is the best fit for your unique situation.
Below are some of the factors to consider.
Interest rates
It’s important to keep in mind that the mortgage products and interest rates that are available to you will depend on your personal circumstances as a homeowner. If you’re looking for a 90% LTV product, you’ll typically have the option of choosing between fixed or variable rates. Fixed rates are most commonly available for 2 or 5 years, although you might also be able to find them for 3, 7, or 10 years. As a general rule, the bigger your deposit, the lower your interest rate will be. These rates are often staggered at 5% intervals, so it’s worth exploring all your options to find the best deal for you.
90% LTV product fees and incentives
Arrangement fees
When it comes to 90% LTV Mortgages, you’ll find that there are different products with varying fee structures. Some may have no fees at all, while others may have fees ranging from £1,000 to £2,000, or sometimes a percentage of the loan amount. It can be confusing to figure out which option is the most cost-effective for you, but that’s where a mortgage broker comes in. They can help you calculate the overall cost of each option, taking into account the fees and interest rates, to help you make an informed decision.
It’s also worth noting that most fees can be added to the loan amount or paid upfront at the start of the mortgage.
Other mortgage fees to consider
In addition to the arrangement fees, there might be other expenses to take into account such as valuation fees, booking fees, and fees charged by mortgage brokers.
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Cash backs and incentives
Some mortgage products come with cash backs and incentives? For instance, if you’re a first-time buyer looking for a 90% LTV mortgage, Nationwide is currently offering a fantastic £500 cash back deal. Other lenders might even offer free valuations or other incentives to sweeten the deal. These perks can be really helpful in reducing the overall cost of the mortgage, so don’t forget to take them into account when comparing different deals.
Better credit scores allow for better affordability
When it comes to mortgage loan-to-values, they typically come in 5% intervals. However, different lenders may have their own unique criteria and credit score requirements based on the loan-to-value ratio you’re applying for.
For example, if you’re applying for a mortgage with a 5% deposit, you may need a higher credit score to pass the lender’s eligibility criteria. On the other hand, if you have a 25% deposit, you may find that the credit checks or criteria are a bit more lenient.
Compare 90% LTV
mortgage deals
Having a good credit score can make a big difference when it comes to accessing favourable mortgage deals. Lenders will often offer better interest rates and more attractive terms to borrowers with a higher credit score, as they are seen as lower risk.
This means that if you have a good credit score, you’ll have a better chance of accessing more favourable mortgage deals that can save you money over the long term.
Affordability and criteria
Mortgage lenders typically borrowing up to 90% or even 95% loan-to-value ratios. However, it’s crucial that you can afford to cover the remaining amount of the mortgage. Keep in mind that some lenders may have restrictions on certain property types, such as new builds or specific flats, that could affect your loan-to-value ratio. Additionally, other factors such as your credit score or residency status may require a larger deposit.
When it comes to getting a mortgage with a 10% deposit and a 90% LTV, most lenders tend to cap your borrowing at 4.5 times your income. But, if you’re looking to borrow more than that, your options may be limited, especially if your income falls below a certain threshold (typically around £50,000 to £75,000).
If you’re able to put down a 15% deposit, you’ll increase your chances of being approved for a higher income multiple. So, it’s definitely worth considering if you’re looking to borrow a bit more.
90% LTV on Affordable housing schemes
If you’re considering purchasing a property through an affordable housing scheme such as shared ownership or the first homes scheme, you might have the option to buy with only 10% of the share price instead of the market value. However, this will depend on your eligibility and affordability.
90% LTV first time buyer mortgages
For many first time buyers, the prospect of saving up for a large deposit can be daunting, especially in today’s climate of high property prices and increasing living costs. However, 90% loan to value (LTV) mortgages can be an attractive option, as they allow buyers to secure a mortgage with a smaller deposit.
Fortunately, there are plenty of lenders who offer 90% LTV mortgages for first time buyers, subject to meeting the eligibility criteria outlined in this article. These criteria may include factors such as credit history, income, and employment status, among others.
90% LTV home moving mortgages
If you’re planning to move into a new home you can apply for a mortgage up to 90% loan to value, potentially even 95%. This means you’ll only need to pay a 10% deposit upfront, which can make it easier to manage your finances.
You will have access to similar mortgage products as first-time buyers or any other buyer, which can help you find the best deal for your needs.
However, keep in mind that you’ll still need to cover the remaining 10% deposit and any moving costs, so it’s important to have enough savings and equity to do so. This can help you avoid any financial stress or unexpected expenses that may come up during the moving process.
Buy to let mortgages at 90% LTV
At present, it’s not possible to obtain a buy to let mortgage at 90% LTV, as most lenders require a minimum deposit of 25%. This is due to the higher risk associated with buy to let properties, as they typically require a larger investment and can be more difficult to manage than residential properties.
However, if you already have a buy to let mortgage and are looking to refinance, some lenders may offer products for existing customers with higher LTVs. This could allow you to release some equity in your property and potentially reduce your monthly repayments, but it’s important to check with your mortgage provider to see what options are available to you.
Should I get a 90% LTV mortgage?
Making the decision to purchase a home using a 90% loan to value mortgage will depend on your unique situation. There are many advantages to owning your own home, such as the freedom to decorate, build equity over time, and the potential to make a profit if you decide to sell.
However, it’s important to weigh the pros and cons of homeownership versus renting before making a decision. Renting can offer flexibility and lower upfront costs, but you may also miss out on the benefits of building equity and the potential for property appreciation.
When it comes to deciding whether to buy a home with a 90% loan to value mortgage, it’s important to consider your financial situation carefully.
If you’re close to having a 15% deposit, it may be worth delaying your purchase so that you can secure lower interest rates or borrow more money. This can save you money in the long run and help you avoid paying more in interest
Can I get a 90% LTV mortgage on a flat?
It’s important to be aware that while it is possible to secure a 90% LTV mortgage on a flat, not all lenders will consider it. Some lenders like HSBC and Nationwide require a lower loan to value ratio for second-hand flats, such as 85% LTV, as they consider them to be a higher risk.
However, there are still many lenders who are willing to consider 90% or even 95% LTV for flats. For example, Halifax and Santander are just a couple of the lenders who offer these types of mortgages for flats.
Are banks doing 90% LTV mortgages?
When it comes to applying for a mortgage with a 90% loan to value ratio, most banks and lenders are willing to consider this type of loan. However, it’s important to keep in mind that your eligibility for a 90% LTV mortgage may depend on factors such as the property type and your personal circumstances.
For example, some lenders may have restrictions on the loan to value ratio for certain types of properties, such as flats or older homes. Additionally, your credit score, employment status, and residency status can also impact your eligibility for a 90% LTV mortgage.
Can I get a mortgage at 90% LTV with bad credit?
If you’re considering applying for a mortgage with bad credit and a 90% loan to value ratio, it’s important to be aware that while it’s not impossible, it can be challenging to find a lender who is willing to consider your application.
Adverse lenders, who specialise in lending to those with bad credit, may cap lending at 85% LTV for certain types of adverse credit.
The severity and recency of the adverse credit can also play a role in your eligibility for a 90% LTV mortgage.
For example, historic adverse credit may have less of an impact on your application than more recent adverse credit, and factors like CCJs (County Court Judgements) may have a bigger impact than a few missed payments.
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Are nationwide doing 90% LTV mortgages?
Nationwide is not currently offering 90% loan to value mortgages for flats. If you’re looking to purchase a flat with Nationwide, you may need to provide a 15% deposit, as they cap their lending at 85% for this type of property.
90% loan to value on new builds
Obtaining a 90% loan to value (LTV) mortgage on a new build property is possible, but most lenders tend to require larger deposits for these types of properties.
For new build flats, lenders often require a deposit of 15-25% of the property’s value.
On the other hand, new build houses typically have less stringent criteria requirements, but lenders may still require a minimum deposit of 15%.
Remortgaging onto a 90% LTV deal
Yes, it is possible to remortgage onto a 90% loan to value (LTV) deal, provided that you meet the other eligibility criteria set by the lender. However, it’s worth noting that not all lenders offer 90% LTV remortgages, and many will cap at 85% LTV if you are releasing additional funds for things like debt consolidation or home improvements.
How can Strive mortgages help?
We can assist you in securing a mortgage by offering expert guidance and advice throughout the entire process. We can help you understand all of your options, including different types of mortgages, interest rates, and eligibility requirements.
Working with a mortgage broker like Strive Mortgages will give chance of success with your mortgage application.
For more info on LTV mortgaes, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
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