Compare 85% LTV Mortgages
If you want to put down a deposit of 15% on a property purchase then you will need a mortgage with a loan-to-value (LTV) of 85%. Below you can compare the latest interest rates on 85% LTV mortgages from some of the UK's leading mortgage lenders.
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How to choose the best 85% LTV mortgage?
At NerdWallet, we know not everyone is looking for the same thing when it comes to mortgages.
What you want from an 85% LTV mortgage will depend on the different variables that make up your own financial situation.
That is what makes our quick, simple and comprehensive comparison tool so useful. All you have to do is:
- Answer a few short questions, so we can find out what you want from a mortgage.
- The tool will search the entire mortgage market for you.
- It will only show you the mortgages relevant to what you are looking for.
And then, once you have compared mortgages – be that by initial monthly repayments, interest rates, or one of the many other details shown – you can apply directly or through a broker.
Can I get a mortgage with a 15% deposit?
The simple answer is yes: you can get a mortgage with a 15% deposit. Certain providers will even offer mortgages to first-time buyers with a deposit as low as 5%.
For context, a 15% deposit on a property worth £300,000 would be £45,000. For £200,000 it would be £30,000, and for £500,000 it would be £75,000.
However, there is no guarantee that you will get a mortgage with a 15% deposit. Lenders take into consideration much more than just the amount you have saved for your deposit.
This includes, but is not limited to:
- Passing the lender’s credit check.
- Meeting the lender’s affordability checks, based on your income and spending.
- Proving your deposit has come from an approved source.
- Being within the maximum and minimum age requirements.
The larger your deposit, the easier you may find it to successfully apply for a mortgage. You may also be able to access better interest rates with a bigger deposit. Again, however, it is important to remember that a large deposit is not a guarantee that your application will be accepted.
What types of 85% LTV mortgage rates are there?
When searching for an 85% LTV mortgage, you will likely see four different types of mortgage rates. These are:
- Fixed rates: with this type of mortgage rate, you will pay the same level of interest for however long the deal lasts, regardless of what happens to interest rates in general.
- Variable rates: these rates will change alongside wider interest rates. This means that, while you could end up paying less than a fixed rate, you could also end up paying more.
- Discounted rates: this will be a reduced version of the mortgage provider’s Standard Variable Rate (SVR), and will last for an agreed period of time.
- Tracker rates: these rates specifically follow the Bank of England’s base rate, and will rise and fall alongside it, with an added margin on top.
You should carefully compare the different kinds of mortgage rates available to find the one that best meets your needs.
What are the benefits of a 85% LTV mortgage?
There are a number of benefits related to a 15% deposit mortgage. These include:
- Lowered risk of negative equity The higher your deposit, the lower your chances of falling into negative equity, a risk that is more pronounced with 5% deposit mortgages.
- More choice. With an 85% LTV mortgage, you will have a greater choice of mortgages and interest rates than at a higher loan-to-value ratio.
- Lower monthly payments. With a 15% deposit mortgage, your monthly repayments will likely be lower than if you had a smaller deposit.
What are the disadvantages of a 85% LTV mortgage?
One of the main drawbacks of an 85% LTV mortgage is that it will require more savings to achieve than a 5% deposit mortgage.
And although it does come with a lower risk of negative equity, better interest rates, and lower monthly payments than a 5% deposit mortgage, you won’t be in as strong a position as with a bigger deposit. The greater your deposit, the better the deals that will be available to you.
You shouldn’t let this dissuade you from buying a home with an 85% LTV mortgage, however. There are other factors to consider beyond the hard numbers of your mortgage, including money you would otherwise potentially be spending on rent, the realities of trying to save for a larger deposit, and the specifics of your personal circumstances.
85% LTV Mortgages FAQ
What is an 85% LTV mortgage?
Loan-to-value (LTV) is the percentage of a property’s value that is provided by your mortgage lender. An 85% LTV mortgage means your deposit covers 15% of the property’s value and your mortgage covers the remaining 85%.
Is 85% a good LTV?
While many of the best mortgage products start at an 80% LTV, or 20% deposit, an 85% LTV mortgage is still a good level of deposit, and puts you in a stronger position than if you were opting for a 95% LTV mortgage.
Is 15% a good mortgage deposit?
A 15% deposit will leave you in a stronger position than a 5% deposit in terms of what mortgage rates you can access. However, it is always worth keeping in mind that the larger your deposit, the better the mortgage deals available to you.
Can I get an 85% LTV buy-to-let mortgage?
Although it is possible to get an 85% LTV buy-to-let mortgage, your choice of lenders will be much smaller than with a larger deposit.
Most buy-to-let mortgage providers will normally ask for a deposit of 25% – so an LTV of 75% – though the requirements can range between 20% and 40%.
To get a 85% LTV buy-to-let mortgage, you may need to have prior experience as a landlord of successful rental properties.
Can I get an 85% LTV second home mortgage?
While it is possible to get an 85% LTV second home mortgage, you will likely have a slim choice of lenders, and will need to have a fairly spotless record and score well on the provider’s affordability checks.
Some lenders may also offer 85% LTV second home mortgages on a capital and interest repayment basis only.
Can I get an offset mortgage with 85% LTV?
While there are a small number of lenders that will offer an offset mortgage with an LTV of 85%, these will come with much higher interest rates.
The maximum LTV for an offset mortgage with most lenders is between 75% and 80%.
Are 85% LTV mortgages suitable for first-time buyers?
An 85% LTV mortgage can work for buyers at any rung on the property ladder. Deciding whether or not they are suitable for you depends on your individual circumstances. Think about your income, target property and saving potential and decide on whether or not you are in a position to save the 15% deposit you will need.
Is an 85% LTV mortgage cheaper than other LTVs?
The lower the LTV on a mortgage, the lower the interest is likely to be. This is because lower LTVs mean less risk for the lender.
How do I apply for an 85% LTV mortgage?
To apply for an 85% LTV mortgage, you will need to present documents including a form of ID, recent bank statements and evidence of your income. If you’re employed, this will be your payslips. Self-employed people will generally need to supply their tax returns for the past two to three years. These documents help build up a profile of you for the provider, to help them judge the risk involved in lending to you.
How much is early repayment on an 85% LTV mortgage?
Early repayment can look like an appealing option if you come into a windfall or your household income increases. However, providers may implement early repayment charges (ERCs). Exactly how much it will cost you to repay your mortgage early depends on your lender and your agreement with them, so check the small print before you confirm the offer.
Do I need a good credit score to get an 85% LTV mortgage?
A good credit score will help you to access competitive rates for an 85% LTV mortgage. Not all lenders will be willing to offer a mortgage to individuals with poor credit scores. Of those that do, many will implement higher interest rates to account for the perceived increase in risk.
How does LTV work?
LTV is the loan-to-value ratio of your mortgage. Essentially, it is the amount you are providing as a deposit versus the amount you are borrowing as a loan, i.e. the mortgage, expressed as a percentage of the value of the property.
For example, if you have a £30,000 deposit, and intend to buy a property worth £200,000, your loan-to-value ratio would be 85%.
The calculation would be expressed as: ((Property Price – Deposit) ÷ Property Price) x 100
Is there an ideal LTV for a mortgage?
The higher the LTV, the higher the interest rate is likely to be on a mortgage. But there is no ideal LTV for a mortgage as each option represents a different product designed for individuals in different financial circumstances.
To find the ideal LTV on a mortgage for you, take some time to assess your finances, how much you can realistically save, and your requirements from your property before carefully researching the market.
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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