60% LTV Mortgages
The size of the mortgage deposit you’re willing & able to put down is very much your starting point for getting onto the property ladder. This is because it plays a considerable role in determining what options are available to you. The more you save, the easier it becomes to secure a deal. Not to mention, a deal which is substantially more favourable in the financial long term. It certainly isn’t easy to accrue a sizable mortgage deposit, it’s usually a process requiring a lot of time & monetary shrewdness. However, if you’ve invested your efforts wisely over the years and, as such, now have a respectable amount of capital in the bank, then a 60% LTV (loan to value) mortgage may be the perfect solution to your housing needs. 60% LTV mortgages are mortgages which have you put down a deposit worth 40% of a property’s total cost, meaning that you borrow the remaining 60% from a lender.
60% mortgages fall on the lower end of the LTV spectrum, with the lowest LTV ratio lenders offer being 50%. Having said this, a 60% LTV is the cutoff point that mortgage providers typically reach before not significantly improving upon a deal’s terms anymore. And so, consequent to 60% loans not posing a relatively big ask, there will be a vast array of options for you to choose from if you can afford such a deal.
The implied scale of choice can be somewhat paralysing, owing to how it gets exponentially harder to make a decision when there are more routes for you to take. Regarding this, it’s important to note that not all deals are as lucrative as they might first seem. It’s for this reason why we highly advise you to use an expert mortgage broker who can guide you through the whole procedure from beginning to end, so that you end up with a product that’s specifically tailored to you and your situation.
We at The Mortgage Genie are proud to say that we’ve fulfilled many of our clients’ housing dreams by discerning and securing the ideal 60% LTV mortgage for them. Give us a call at 01915809890 if you’re interested in becoming one of the plenty among our success stories.
Although we can do all of the above for you, it’s still worth informing yourself on all there is to know about 60% LTV mortgages. To help you familiarise yourself with the notion, we’ve put together this piece which goes over all the essential details. We will cover:
What are 60% LTV mortgages?
The loan to value - or LTV - of a mortgage signifies a portion of the overall cost of a property which you will need to borrow from a lender in order to buy it, with the remainder comprising your deposit. Each figure is represented as a percentage. In this context, a 60% LTV mortgage is one where a mortgage provider loans you 60% of a house’s total value, subsequent to your putting forward a mortgage deposit equating to 40% of a given property’s price.
For instance, if you wanted to purchase a property with a market value of £500,000 by using a 60% LTV mortgage, then you would be required to produce a deposit of £200,000. And so, in this specific case, you would have to borrow the leftover £300,000 from a lender in order to make up the complete cost. This latter sum is paid back by you through a set of monthly repayments. The length of time in which you will gradually make these repayments is subject to your contract; an entire mortgage term can last anywhere from 2 to 40 years.
Is 60% LTV a good ratio?
Considering that the quality of your mortgage deal is down to the size of your deposit, and that a 60% mortgage is one of the lowest LTV ratios available, this makes 60% LTV mortgages undeniably good products. The reason for this is that, in essence, the more money you’re able to provide a lender with, the less of a risk you seemingly possess.
It’s natural to see, an individual’s capability to save money often directly represents their financial stability. Of which, a mortgage deposit is typically the largest investment a person will save towards. Moreover, a lower LTV intrinsically means that a lender won’t have to provide as much money as they would for higher LTV ratio mortgages. Some higher LTV mortgages might require support from a guarantor to negate the inherent risk they carry, this is categorically not so for 60% LTV mortgages.
Taking this into account, just by having a deposit worth 40% of a property strongly contributes to your mortgage application’s case. This is, primarily, why if you financially qualify for a 60% LTV mortgage, then you won’t have to look for long before finding a lender who is willing to make up the remainder. Additionally, amassing such a sum entitles you to exclusive benefits. Namely, you will be offered those deals which come with the most competitive interest rates, therefore making your monthly repayments smaller and more manageable. This being said, you should still bear in mind the regular fees and charges that come with every mortgage so that you have a solid idea of the overall expense involved.
Can I get a 60% LTV mortgage?
Despite the fact that a large deposit plays an important part in determining your eligibility as a 60% LTV mortgage candidate, it isn’t the only element that goes into lenders’ considerations. As is the case when you apply for any mortgage, regardless of the LTV ratio, you should expect to undergo certain scrutiny. This consists of an affordability check to guarantee your ability to keep up with the prospective monthly repayments, as well as a hard credit check to certify your personal suitability. After all, mortgage providers need definitive assurance of your reliability, i.e., confirmation that you are highly unlikely to default on your loan and cost them money.
Concerning affordability, it’s a general rule that lenders are prepared to offer up to four times an individual’s annual income. To extend the previous example, if you were after a house which was valued at £500,000, then you’d most likely need to be earning around £125,000 a year, whether this is combined or not. Lenders will also need proof of this income and may be inclined to examine your expenses & outgoings to discern how prudently you spend your money.
In the area of your individual profile, lenders will inspect the quality of your credit score and use it as a strong indication of both your personal and financial security. This is by how it will reveal if you’ve ever had adverse credit, failed to meet payday loans, handled a court county judgement (CCJ), had an IVA, or have filed for bankruptcy in the past. Evidently, each of these factors will impress a negative influence upon your profile and can lead to lenders rejecting you. However, if they occurred more than six years ago or longer, then it’s possible that their impact will be lessened. On the back of this point, all lenders have a different set of criteria by which they measure an applicant's eligibility, and so it’s a case of finding the right lender for your specific position.
It’s noteworthy that hard credit checks leave a mark on your report. So, If you want to get an idea of your current suitability before you submit an application, you can use our free credit check tool (£14.99 per month after the free 30-day trial). Making use of it will help you to spot any potential mistakes and fraudulent activity so that you can deal with related problems efficiently. The trial and subscription can be cancelled at any time.
What are the best 60% LTV mortgage rates?
As we mentioned, 60% mortgages entitle you to some of the best interest rates on the market. But beyond this, it’s likewise salient to know how these are categorised. There are four distinct types of mortgage rates, which ones you will be offered by lenders will depend upon your collective financial health. They are as follows:
1.Fixed mortgage rates
Mortgages that have fixed rates do not have their initially-proposed rate change at any point over the entire term of the mortgage period. This means that your monthly repayments will remain the same each month, effectively providing you with a degree of certainty, and thereby making it easier to budget. Fixed-rate mortgages are opportune for when interest rates are low.
2.Standard variable mortgage rates
Mortgages with a standard variable rate are the opposite of fixed-rate mortgages in that their interest rates can fluctuate on a monthly basis. Whether the rate goes up or down is a decision made by your lender. You will automatically be placed on your lender’s SVR when your introductory mortgage deal comes to an end. One benefit of SVR mortgages is that there are usually no early repayment charges.
3.Discounted mortgage rates
Discount-rate mortgages are characterised as being a specific type of SVR. Discounted rates are called as such because these mortgage rates are discounted from your lender’s SVR for a certain period of time, generally around two years. Discount-rate mortgages can demand less than fixed-rate mortgages initially but often come with costly early repayment charges.
4.Tracker mortgage rates
Tracker-rate mortgages embody a type of variable interest rate which literally ‘tracks’ the Bank of England (BoE) base rate. That is, if the BoE base rate increases, then your monthly repayments will increase accordingly and vice versa. Although tracker-rate mortgages imply a certain volatility, they can lead to considerable savings when the BoE base rate falls, the primary disadvantage being the contrary.
What interest rate can be named the best is purely circumstantial. When deliberating over the various interest rate types, you should have a firm idea of what your personal financial situation is. Thereafter, you can decide on which option is the most favourable. It’s here where having a mortgage broker at hand will be of unequivocal use.
Can I get a buy-to-let 60% LTV mortgage?
The short answer to this question is yes, it’s entirely possible to get 60% LTV buy-to-let mortgages. Similar requirements apply for a 60% buy-to-let mortgage as with a 60% standard residential mortgage. Indeed, likewise, so too do the standout advantages. The absolute maximum LTV mortgage for a buy-to-let property is 85%, so a deposit of 40% is definitely an adequate provision.
Alternatives to 60% LTV mortgages
Evidently, 60% LTV mortgages are a great option for those who can afford them, yet the majority of prospective homeowners unfortunately cannot. It would be wrong to understate how challenging it is for most people to amass a deposit equal to 40% of a property’s total value. Although a possibility, rather than being for first-time buyers, 60% mortgages are usually geared for existing homeowners who are either looking to remortgage or move home.
To instil a level of balance within this post, it should be said that there are plenty of alternatives to 60% LTV mortgages. Just because it’s infeasible for an individual to save up a 40% deposit, this doesn’t go to say that they are thus excluded from the property ladder. In fact, there are many fruitful deals on the market at present. By the same token, even if you qualify for a 60% LTV mortgage, it may be that you would rather retain some savings, as opposed to lowering your monthly repayments.
Followingly, if this applies to you, then we would direct you to higher LTV mortgages such as 75% mortgages, 80% mortgages, 85% mortgages, 90% mortgages, 95% mortgages, and even 100% mortgages. Further still, it could be useful for you to read up on shared ownership mortgages. The diversity of the mortgage market truly makes it so that there is a product for everyone, whatever your personal situation and financial circumstances are.
Here at The Mortgage Genie we have a comprehensive understanding on how to get a mortgage and are dedicated to assisting people secure loans of all types. We hope that this article has answered any questions and cleared up any doubts you might have had surrounding 60% LTV mortgages.
Every day we help an increasing number of people to achieve housing happiness by finding them a perfect mortgage product, one that is distinctly suited to their needs and requirements, all while guiding them through each step of the process. If you’re seeking a team of expert mortgage brokers then you’re in the right place, just get in touch by phoning 01915809890 and we’ll set you on the path towards owning your dream house! And why not see how much you could borrow up to today by using our mortgage calculator?