What is an 80% LTV mortgage

An 80% LTV mortgage lets you borrow up to 80% of the purchase price of a property.

You pay the remaining 20% as a deposit before you start paying your mortgage.

If you’re remortgaging onto an 80% LTV mortgage, the 20% could be the equity in your home if:

LTV stands for loan to value.

It’s the ratio between the loan you take out and the value of the property.

The higher the LTV, the higher the interest rate you’ll pay as the risk to the lender increases when you borrow more.

80% LTV buy to let mortgage

An 80% LTV buy to let mortgage is likely to be the highest LTV deal you’ll be able to get.

It is possible to get an 85% LTV mortgage, but:

  • very few lenders offer them

  • they’re difficult to get

  • rates are high

You can get an 80% LTV buy to let mortgage to:

  • buy a new property to rent out

  • remortgage to get a better deal

Ask a broker to help you find the best deal. Some, like Trussle, don’t charge a fee.

80% LTV buy to let mortgage calculator

You can work out whether you’ve got a big enough deposit or enough equity for an 80% LTV mortgage by using an LTV buy to let mortgage calculator.

You just need to put in:

  • your deposit, or equity if you're remortgaging

  • the property’s value

80% LTV 5 year fixed mortgages

An 80% LTV 5 year fixed rate mortgage lets you fix your repayments for 5 years.

This means the amount you pay for your mortgage won’t change during this time.

Should I get an 80% LTV mortgage

An 80% LTV mortgage could be right for you if you’ve got 20% of the purchase price to put down as a deposit.

The recommended deposit is about 20%, so you’re spot on.¹

The higher the LTV the higher the interest rate as lenders see the loan as more risky.

So save for a bigger deposit if you want smaller monthly repayments

How to get the best 80% LTV mortgage

The best 80% LTV deals are those with lower interest rates as well as lower fees.

There’s usually a lot of choice if you want to take out an 80% LTV mortgage. But some lenders have reduced their range of products because of the coronavirus.

While choice is a good thing as competition keeps rates low, it can be difficult to work out which deal’s right for you.

A broker can find the best 80% LTV mortgage deal for you if you need some help.

Everyone’s personal situation is different and a broker will look for a deal that suits you.

Trussle, for example, works with 90 lenders offering about 12,000 deals.

Make sure you know how much a mortgage will really cost before taking it out. 

This is known as the true cost. It’s the total amount you'll pay back over the initial fixed or discounted period.

Add up the interest, capital repayments and fees, then take away any incentives the lender’s offering, like cashback.

Or ask your broker to help.

All mortgage guides, calculators and deals

Source

¹ Money Advice Service: How much deposit do I need for a mortgage?

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Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

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