Potential advantages of a high loan to value first time buyer mortgage
Advantages of a high loan to value (LTV) mortgage for first time buyers include:
- Being able to buy a house even if you are on a tight income and cannot save a substantial deposit
- Not having to put in a lot of cash up front, saving it for other things such as improvements to the house
- Getting onto the housing ladder and potentially saving on increases in rental payments over the years
Potential disadvantages of a high loan to value first time buyer mortgage
Disadvantages of high LTV mortgages for first time buyers include:
- Few lenders offer them so it is not competitive and higher interest rates are often charged
- You must be able to make the repayments within your budget, without it being too much of a stretch – if this is the case, it may be beneficial to wait a little longer and save a little more before you buy, in order to be eligible for a lower LTV mortgage and thus lower monthly payments. Mortgage lenders will ‘stress test’ your finances to ensure that you will be able to make the repayments even if your financial circumstances alter in the future
- If the value of the property goes down, you could go into negative equity, when you owe more than your property is worth. This is a higher risk the higher your LTV is, because you own less of the property outright.
Choosing a high LTV mortgage deal if you are a first time buyer can be very much a matter of weighing yup the relative benefits and drawbacks. In order to help you make a decision, our expert advisers can be contacted on 0117 332 3389 – they can help you to find the best high LTV first time buyer mortgage for your circumstances. You can also use our free mortgage calculator, above to help you find and compare the latest high loan to value mortgage deals.