High LTV Mortgage
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Meet the Author
Adam Nunn
Meet the Author
Jon Porter
High LTV Mortgage
Adam Nunn and Jon Porter are here to talk to us about high Loan to Value mortgages.What is considered a high Loan to Value ratio?
A high Loan to Value (LTV) is usually a mortgage where you borrow at 90% or above. Lenders have to take out a ‘higher lending charge’ at 90% or more. That protects them against the risk of the property falling in value and them having to repossess your home.
This is partly the reason why there might be more restrictions or limitations when you’re borrowing at a high LTV.
How do high Loan to Value mortgages on high value properties work?
With higher borrowing amounts, there can be restrictions. If you were borrowing 50% against the value of the property, with a 50% deposit, your borrowing amount can be vast. You could borrow £2 million plus with some lenders.
With a 95% Loan to Value where you’re only providing a 5% deposit, that could be restricted. You might only be able to borrow a maximum of £500,000 to £700,000 from a lender.
It becomes a bit more restrictive because the lender has risk factors to take into consideration. It can vary with different lenders and the location. In London, for example, you might be able to go higher than here in Cambridgeshire, where we’re based.
Property type can also have an effect. Lenders may restrict the Loan to Value if you’re buying a flat or a new build. We need to consider the source of deposit, too. On a new build, for example, the developer might be providing you with some deposit, and some lenders will require you to have your own source of deposit as well.
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Who can get a high Loan to Value mortgage?
High Loan to Value mortgages are specifically for residential properties. You won’t find a 90% mortgage on an investment Buy to Let, for example.
Generally, high Loan to Value mortgages are accessible to a wide range of people, although there can be limits for those with significant debt or bad credit history.
The same could be true with riskier or more complex income, some forms of self-employment or employment that’s non-guaranteed. Different types of contracts may come into this.
There are still some 95% mortgages for people with bad credit. Your borrowing options might be more limited, but there are potentially options available.
How do I get a high Loan to Value mortgage? What’s the process?
The best advice is to speak to a broker because we’ll take you through it step-by-step. We’ll tell you the pros and cons and whether it’s worthwhile to take a high LTV mortgage if you need to increase your deposit.
There are restrictions – not necessarily adverse credit, but around credit score generally.
We always ask our clients to check their credit file before we meet them, then we get the report and go through it.
The credit companies do provide you with a score, but that’s not necessarily the way a lender works. It can be a good guide, and understanding the details may lead us to say that you need a 10% deposit, for example, if no lenders will allow a 5% deposit for you.
Talking to a broker is the simplest way to find a high Loan to Value mortgage.
How else can a mortgage broker help here? Have you got any final thoughts?
We’re not just here to tell you yes or no, but to give you advice. Can you do something now, or would a bit more planning put you in a better position?
Another thing to bear in mind is that in the last couple of years, we’ve started to see 100% mortgages, where you don’t need a deposit at all. More and more lenders are offering these schemes now.
That could be a brilliant solution, and particularly for people with high rental costs who are struggling to build their deposit. So talk to a broker even if you don’t have a deposit, because there may just be options for you.
Key Takeaways:
- A high Loan to Value (LTV) mortgage is typically where you borrow 90% or more, which requires the lender to take out a ‘higher lending charge’ to manage the risk of the property falling in value.
- For high-value properties, a high LTV loan is often subject to restrictions on the maximum borrowing amount, unlike lower LTV mortgages.
- Restrictions on LTV can vary based on location, the property type (for example, flat or new build), and the source of the deposit.
- High LTV mortgages are exclusively for residential properties, not Buy to Let investments. There may be limitations for applicants with significant debt, complex income, or a poor credit history.
- The best approach to securing a high LTV mortgage is to speak to a broker, who can provide step-by-step advice and discuss options, including the increasing availability of 100% mortgages that require no deposit.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.