Compare 75% LTV Mortgages
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About 75% LTV Mortgages
Borrowers who can afford to put down a quarter of a property's price down as a deposit will find that 75% loan-to-value (LTV) mortgages often come with considerably lower rates.Compare mortgage rates, deals and lenders.
Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
What is a 75% LTV mortgage?
A 75% LTV mortgage is where you supply a deposit worth 25% of the value of the property you are looking to buy. You would then borrow the other 75% in the form of the mortgage itself.
For example, if you were intending to buy a property worth £200,000, a 75% LTV mortgage would require you to have a deposit of £50,000, which is 25% of the total property price.
When looking for a 75% LTV mortgage, you will normally be able to find them with the following types of mortgage rates:
- Fixed rate – with this type of product, you will pay the same amount monthly for interest for the length of the period specified. Fixed rates are introductory offers when you first take out your mortgage usually between 2 & 5 years.
- Standard variable rate – this means your interest rate isn’t fixed. Due to this, your monthly repayments will rise and fall depending on wider interest rates and your lender’s discretion. You will usually be put on a standard variable rate (SVR) once your introductory deal has expired.
- Discounted variable rate – this is a reduced version of your lender’s standard variable rate. Like a fixed rate, discounted variable rates are usually offered as introductory deals when you first take out your mortgage, and will last for a set period of time. Unlike a fixed rate, your monthly payments will rise and fall alongside the rate itself.
- Tracker rate – this is another form of variable rate, normally tied to the Bank of England’s base rate. The rate will usually be 1-3% higher than the base rate to form your tracker rate. Again, this is usually an introductory offer covering the first few years of your mortgage.
It is always important to carefully consider each type of mortgage rate before deciding which one best suits your short- and long-term financial situation.
Is 75% LTV good?
There is no one ‘good’ loan-to-value ratio. It all depends on your personal situation and financial circumstances.
However, when applying for a standard residential mortgage, some of the most favourable interest rates are unlocked when you have a deposit worth 25% or more. This is because lenders will see you as less of a risk.
The upshot of this is that you will end up making lower monthly repayments than at a higher LTV (i.e. with a smaller deposit).
It is important to note that having a 25% deposit does not guarantee you will be able to successfully apply for a 75% LTV mortgage. You will also need to meet the lending criteria, which include:
- *roving your deposit comes from an approved source.
- Satisfying the lender’s affordability and credit checks, based on your income, spending and credit score.
- Supplying the required proofs of ID, income and evidence of deposit.
- Being within the maximum and minimum age requirements.
What are the advantages of a 75% LTV mortgage?
There are a number of notable advantages to consider when applying for a 75% LTV mortgage. These include:
- Access to some of the most competitive mortgage interest rates.
- Smaller monthly payments than at mortgages with a higher LTV.
- Lower risk of slipping into negative equity than at mortgages with a higher LTV.
What are the disadvantages of a 75% LTV mortgage?
The main disadvantage of a 75% LTV mortgage is that you will need to save up a 25% deposit. If you were looking to buy a property worth £300,000, for example, that would be £75,000.
However, there are still good mortgage rates available at higher LTVs (i.e. lower deposits). So don’t be deterred if you have a deposit worth 15% or 20% of the property you are hoping to purchase. You can even get mortgages with a deposit as small as 5%.
How do I get the best 75% LTV mortgage for me?
To make sure you are finding the right 75% LTV mortgage for your needs, you can use our quick and easy mortgage comparison tool. All you have to do is follow these simple steps:
- Answer a series of short questions related to your mortgage situation.
- Let the tool search the mortgage market for you.
- Compare the tailored results.
- Select the mortgage that best matches what you want.
- Apply directly or through a mortgage broker, depending on the lender.
- Or, speak to a mortgage advisor
75% LTV Mortgages FAQ
What is a 75% LTV mortgage?
LTV (loan to value) is a figure denoting the size of your mortgage loan, as lent by a provider, as a proportion of a property’s value. An LTV of 75% means the mortgage loan covers three-quarters of the property’s value.
What is considered a high LTV on a mortgage?
You would be unlikely to find LTVs much lower than 60% (40% deposit) or higher than 95% (5% deposit).
What is the deposit on a 75% LTV mortgage?
If the loan given by your provider covers 75% of a property’s value, the deposit you will need to pay up front will be 25%.
Can I get a buy-to-let mortgage with 75% LTV?
Yes, it is possible to get a 75% buy-to-let LTV mortgage. For some lenders, an LTV of 75% will be the maximum loan-to-value ratio they allow for a buy-to-let mortgage. This means the minimum deposit you will need to pay is 25
Is it cheaper to seek a higher-LTV mortgage?
Generally the higher the LTV the higher the interest rate charged by the lender to offset risk of the greater loan amount.
Why is a good deal important for a mortgage?
Mortgages are some of the lengthiest financial commitments you can make, as they take many years to repay. If you choose the right deal to suit your financial situation, you can repay those regular installments in a way that is affordable and mitigates unwanted financial pressure.
Is it possible to reduce the costs on monthly payments?
Products such as fixed-rate mortgages or interest-only options can help with stablising and reducing initial costs. The former helps put a temporary freeze on the rate of interest you pay, making monthly installments less volatile. The latter limits monthly installments to just interest repayments, with the original loan repaid at a later date as a lump sum.
Interest only options are limited products and only available on smaller LTV loans and you would need to demonstrate how you intend to clear the debt with the lender at the end of the term.
Is the SVR a cheap rate to pay?
In many cases, when a fixed-rate mortgage deal expires, customers will transition to paying the lenders standard variable rate. Depending on the current economic state and the Bank of England base rate this can be higher or lower than your previous fixed rate. New fixed rate deals will appeal as they will usually be priced lower than the SVR.
Why do providers use early repayment charges?
Early repayment charges (ERCs) are a means of dissuading customers from exiting a mortgage ahead of the end of their deal period. Early repayment reduces the number of remaining instalments to pay in the future, but an ERC is a cost to be considered.
Why is a good credit score important on mortgage applications?
Credit scores denote creditworthiness and the higher they are, the less risk a provider will face if lending to you for the long term. Good credit shows that you are likely to be able to pay regular instalments, so you will have greater access to mortgages with lower rates of interest.
What is porting?
For borrowers wishing to move properties while retaining an existing mortgage deal, porting a mortgage is the process of doing so. Not all lenders and mortgage products offer this so check before you proceed.
What other alternative LTV mortgages could be available to me?
If you have a deposit worth 25% of the value of the property you wish to buy, you could also secure a mortgage at a higher LTV. For example, you could opt for an 80% LTV mortgage, where you supply a deposit with 20%, or an 85% LTV mortgage, where your deposit is 15%. This may mean you have more savings left over for renovations or emergencies.
At the same time, if you think you can realistically save towards a higher deposit, you could also consider a 70% LTV mortgage or a 65% LTV mortgage . This would potentially unlock more favourable interest rates, lower monthly payments, and means you would likely be able to pay off your mortgage more quickly.
Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more
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