100% LTV Mortgages Explained

21 Jun 2009 Tell a Friend

Loan to value (LTV) is the ratio of how much you are looking to borrow over how much your home is worth. For example, if your home is worth £100,000 and you're looking to borrow £80,000, the LTV of your mortgage will be 80%.  The most controversial mortgage product in recent years is the 100% LTV mortgage whereby someone would, if their home is worth £100,000, want to borrow the entire £100,000.

To get the best possible deal on a home mortgage loan, you would need to put up some of your savings against the loan would enable you to save money on interest payments.  Your credit rating would also affect the amount that you could borrow.  A 100% LTV mortgage would mean that you would not need to have any savings at all, so the interest payments would have been very high, regardless of your credit rating.  Understandably, this was a popular product until recently for those keen to get onto the property market but with little savings. Since the property market crash, 100% LTV mortgages are no longer offered, and the maximum you should expect to borrow is around 80% of the value of the property if your credit rating is good.

Since mortgage lenders have to pull in a continuous flow of borrowers to stay in business, they will offer high loan to value mortgages to potential borrowers in addition to the safer, low-risk products.  Although the lending criteria is now much tighter than it has been, you would still be able to borrow a considerable amount towards the value of the property if your credit rating is very good.  This type of loan is usually provided to borrowers who have proof of stable income and future earning potential, but who find it difficult to get enough savings together for a deposit. 

If you'd like help finding the best alternative to 100% LTV mortgage, take a moment to fill out a short form, and we will introduce you to a lender from the SimplyFinance network who will be able to answer all of your mortgage questions before searching the market to find the very best mortgage deal for you.