For those looking to purchase a property, the more you can place as a down payment, the better your rate on interest will be.
For those who have 20% of the total funds to buy a house, you may be able to find a good mortgage deal, after a little digging.
Find out more about 80% Loan to Value Mortgages and how they work.
An 80% Loan to Value mortgage is where the borrower seeks to loan 80% of the money needed to fund a property purchase. They have 20% of their own funds to use as a deposit.
80% Loan to Value Mortgages are widely available in the UK mortgage market. This is because house prices are generally high and still growing, which makes it very difficult, especially for first-time home buyers, to raise a large deposit.
If you were able to save for a larger deposit (say 25% or higher) then you would be able to secure a mortgage deal with a lower interest rate. However, there are plenty of good deals out there for people with 20% of their own funds for a home purchase.
Mortgages of 80% LTV can be paid on a repayment basis. This is where you pay off a certain amount of capital every month, as well as meeting the mortgage interest (i.e. the lender’s monthly cost to borrowers). The minimum LTV required for an interest-only mortgage is around 75%, so in order to secure this kind of deal, you will need not only a credible repayment vehicle, but you will also a bigger deposit.
In terms of paying off the interest, you may be able to find discounted interest deals on mortgages as well as fixed term, capped or tracker rate deals. Take a look at our Guide to Mortgage Types for more information.
Please note: If you start off your mortgage on an 80% LTV loan, in a few years’ time you may be able to remortgage for a lower loan to value mortgage, resulting in a lower interest rate payable. Take a look at our Guide to Remortgaging for more on this.
Joni is a first-time buyer. She needs a mortgage for £120,000 and has found a lender who will accept her. She can get a two-year fixed deal for 4.2% and the fees are relatively low for set up. Joni takes the deal because she knows that she will be able to remortgage to a better rate, once she has built up some equity.
Get in touch with a mortgage broker today, they can offer you a free, no-obligation quote.
My biggest concern was finding a mortgage with no strings attached. My options were clearly explained to me and I felt confident about the decision. Alice Silverman, Stoke-on-Trent
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATION EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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