60% LTV Mortgage
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Why Choose Ascot Mortgages
Why Choose Ascot Mortgages
Navigating the mortgage landscape can be a daunting task. As a seasoned mortgage advisor in the UK, I often hear clients ask about the best deals and options they should consider for their financial well-being. One such option that captures attention is the “60% LTV mortgage.” This mortgage type offers competitive rates, manageable repayments, and greater financial flexibility, making it a popular choice for borrowers who have saved a substantial deposit. Ascot Mortgages is pleased to provide this option for you, ensuring you have access to one of the most financially advantageous mortgage options available in the market.
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Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
06.10.2023
Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
06.10.2023
What is a 60% LTV Mortgage?
LTV stands for “Loan-to-Value,” a term used to describe the ratio between the loan you’re taking out and the value of the property you intend to buy. In a 60% LTV mortgage, you are borrowing 60% of the property’s value, and the remaining 40% comes from your deposit. This is often referred to as a 40% deposit mortgage.
- Loan Amount: The money you borrow from the lender.
- Property Value: The full market value of the property you aim to buy.
- Deposit: The initial sum of money you pay upfront.
- LTV: (Loan Amount/ Property Value) x 100
For example, if you want to buy a property worth £300,000, a 60% LTV mortgage would mean:
– Loan Amount: £180,000
– Deposit: £120,000
– LTV: (180,000/300,000) x 100 = 60%
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How Do 60% LTV Mortgages Work?
60% LTV mortgages operate like other standard mortgages but offer advantages like lower interest rates due to the lower risk involved for the lender. Here’s how it typically works:
- Application: You apply for a 60% LTV mortgage with your chosen lender.
- Approval: The lender assesses your financial situation, credit score, and the property you wish to buy.
- Offer: If approved, the lender will make you a mortgage offer, detailing the terms, rate, fee, and repayment structure.
- Completion: Once you accept the offer, you pay the deposit, and the lender provides the 60% loan amount, enabling you to complete the property purchase.
- Repayment: Over the mortgage term, you make regular repayments covering the interest and, usually, some of the principal amount.
Key Points to Remember:
– Interest Rates: The interest rate may be fixed or variable, depending on what the lender offers and what you choose.
– Fees: These could include arrangement fees, valuation fees, and other administrative costs.
– Repayment Period: The duration can vary, but a 25-30 year period is common.
Why Get a 60% LTV Mortgage?
For those who have saved a significant deposit, 60% LTV mortgages present an appealing option for several reasons:
- Lower Interest Rates: The most attractive feature is undoubtedly the lower rate of interest that these mortgages offer.
- Easier Approval: With a large deposit, lenders view you as a lower-risk borrower.
- Flexible Repayment Options: Many lenders offer flexibility in repayment terms.
- Equity: A smaller loan means you own a larger portion of your property outright, giving you more equity.
Expert Opinion:
If you have the means to opt for a 60% LTV mortgage, doing so is often in your best interest. It provides both short-term and long-term benefits, allowing you to save money in the form of reduced interest payments over the term of the loan.
What Types of 60% LTV Mortgage Rates Could I Get?
While there are several deals available in the market, the best 60 LTV mortgages are generally available in two types:
- Fixed-Rate Mortgages: The interest rate is set for a specified period, usually between 2 to 5 years. This allows for consistent repayments but may involve higher fees if you wish to switch before the fixed term ends.
- Variable-Rate Mortgages (also known as Tracker Rates): The interest rate can change based on the lender’s rate or external economic factors. These offer more flexibility but come with the risk of increasing repayments.
Alison Gibson
Ascot Mortgage Expert
Remortgage
Remortgaging is applied when you keep
living in your present property while applying for another mortgage deal with a new lender. Before finding out how to remortgage and get the best offers from experts like Ascot Mortgages, you have to check meeting what parameters of the deal that can help you succeed the most. The range of background factors varies a lot — from the recently changed loan-to-value ratio or your existing agreement coming to an end.
Whether you are trying to get a more beneficial deal or searching for funding to improve your home conditions, remortgaging is one of the most advantageous scenarios to consider.
Advantages of 60% LTV Mortgages
Choosing a 60% LTV mortgage comes with numerous benefits:
- Competitive Interest Rates: You’ll generally qualify for some of the best interest rates on the market.
- Loan Flexibility: A smaller loan allows you greater freedom to make overpayments or take payment holidays, as permitted by the lender.
- Equity Building: With a 40% deposit, you start with a large equity stake in your property, which could be beneficial if property prices fluctuate.
- Easier Approval: Lenders are more likely to approve your application, as the risk for them is significantly reduced.
Disadvantages of 60% LTV Mortgages
However, like any financial product, 60% LTV mortgages aren’t for everyone:
- Large Deposit: The most apparent downside is the requirement of a substantial deposit, which is not feasible for many.
- Lost Opportunity: The money tied up in your property could potentially earn more in other investments.
- Market Risks: If the property market falls, your high equity stake could depreciate, although this risk is somewhat mitigated by the lower loan value.
- Early Repayment Fees: If you choose a fixed-rate deal, you may incur charges for overpayments or early full repayment.
In conclusion, 60% LTV mortgages offer an array of benefits for those who have the financial means to secure one. As always, it’s crucial to consult with a mortgage expert to find the best product that suits your needs and financial situation.
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FAQ
A 60% LTV mortgage means you’re borrowing only 60% of the property’s value, with the remaining 40% covered by your deposit or equity. Key benefits include:
– Lower Interest Rates: Since lenders perceive a lower risk with a higher deposit, they often offer more competitive interest rates for 60% LTV mortgages.
– Greater Chance of Approval: A larger deposit often means a better likelihood of mortgage approval as it demonstrates financial stability and commitment.
– Smaller Monthly Repayments: With a lower loan amount and potentially reduced interest rates, monthly repayments might be more manageable.
Yes, it is possible to secure a 60% LTV mortgage for a second home or investment property. However, the criteria might be slightly different compared to a primary residence, and interest rates might be higher. Lenders will consider the potential rental income (for buy-to-let properties) and any other associated costs when assessing eligibility.
As with most mortgages, there can be various fees associated with a 60% LTV mortgage. These might include:
– Arrangement Fees: Charged by the lender for the mortgage product selected.
– Valuation Fees: For assessing the property’s value.
– Early Repayment Charges: If you repay the mortgage ahead of the agreed product term.
– Legal Fees: For conveyancing processes.
It’s important to discuss with your lender or mortgage advisor to get a full breakdown of all potential fees.
If you’re struggling to meet the repayments on a 60% LTV mortgage, it’s crucial to contact your lender as soon as possible. They might be able to offer solutions such as a payment holiday, changing the repayment terms, or other adjustments. If repayments are continually missed without any agreement, the lender has the right to start the repossession process. However, lenders generally view repossession as a last resort and will typically work with borrowers to find alternative solutions.
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Legal
Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £399 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £879 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT
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