What is the Loan-To-Value ratio (LTV)?
The loan to value ratio of a mortgage indicates how much of your property you own outright (covered by your deposit, and commonly known as equity) and the amount you are borrowing (covered by your mortgage), expressed as a percentage. Therefore, a 50% LTV mortgage means that you are borrowing half the value of the property. For example, if you were to buy a property worth £500,000 on a 50% LTV mortgage, you would pay a deposit of £250,000 and borrow the remaining £250,000 in the form of the mortgage. Many buyers cannot afford such a substantial deposit, which can make 50% LTV mortgage deals harder to find. To compare top mortgage rates and find the best 50% LTV mortgage deals for you, use the mortgage calculator to search over 5,000 mortgage deals based on your personal circumstances.
Who is eligible for a 50% LTV mortgage?
Generally speaking, a lower LTV means that you can get a better deal, because you are borrowing less money and therefore present a lower risk to the lender. However, there are certain criteria that you will need to fulfill in order for your application to be successful.
If you apply for a 50% LTV mortgage, lenders will consider criteria such as:
- Your earnings - Do you earn enough to borrow the amount you want?
- The stability of your income - Are you self-employed or new in a job?
- Your outstanding debts - How much debt do you have?
- Your credit rating - Have you ever missed a mortgage payment or other repayment in the past? Do you have any County Court Judgments (CCJs) against you? Have you even been bankrupt?
How much will a 50% LTV mortgage cost?
Low LTV mortgages, such as 50% LTV mortgages, will generally be cheaper than a high LTV mortgage. Mortgage lenders generally offer better rates for people who have a significant deposit, or equity in their current home, to put towards the purchase value of a new property. There are various interest rate options available, including:
- 50% LTV fixed rate mortgage - your interest payments are fixed for a set period of time (usually several years) after which you will be moved on to another rate
- 50% LTV standard variable rate mortgage - your interest will vary with your lender's mortgage rate
- 50% LTV tracker mortgage - your interest rate will move up or down by tracking an external rate, such as the such as the Bank of England Base Rate
To find the best 50% LTV mortgage deals, see the selected mortgage deals above or call our independent mortgage team on 0117 332 6063.