90% LTV mortgages and coronavirus
Coronavirus has led to many lenders removing high LTV deals from the market.
You may find that very few 90% LTV mortgages are available at the moment.
If you look at the graph, you can see that before the pandemic there was around 2,500 mortgage deals if you had a 10% deposit. Today there's only around 100.
It may be best to wait until things return to normal before you apply for a mortgage. Or if you can, increase the size of your deposit.
Find out more about how coronavirus may affect your mortgage.
What is a 90% LTV mortgage
A 90% loan to value (LTV) mortgage allows you to borrow 90% of the money you need to buy a home.
This means you only need a 10% deposit, so they’re useful if you do not have many savings.
LTV is the ratio between the loan you take out and the value of the property. It’s expressed as a percentage.
Most lenders will only accept LTVs up to 95%.
Lenders take into account the LTV when deciding how much they’ll lend you and what rate they’ll charge.
Best 90% LTV mortgages
Most lenders offer 90% LTV mortgages.
With so much choice it can be hard to decide which deal’s right for you.
Before choosing your mortgage, make sure you know the true cost. Avoid just picking the lowest rate.
This is because the lowest rate does not always mean the cheapest mortgage.
The true cost is the total amount you'll pay back over the initial period. This means the interest, capital repayments and lender fees.
If you need help finding the best 90% LTV mortgage deal speak to a mortgage broker. Trussle works with 90 lenders who have around 12,000 deals between them.
Some lenders only offer their mortgages through brokers.
If you go straight to a lender, they can only offer you their own mortgages.
Learn how to compare mortgage rates and deals.
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Should I get a 90% LTV mortgage
A 90% LTV mortgage could be a good idea if you only have 10% of the purchase price to put down as a deposit.
The smallest deposit you can put down is usually 5% and the recommended amount is about 20%.¹
While a 90% LTV mortgage is a great way to get on the property ladder, they are often more expensive.
Lenders see them as a bigger risk because you’re borrowing so much of the property’s value.
This means they’ll charge you a higher interest rate.
You might decide to save up for a bigger deposit if you want to save money in the long term.
New build mortgages 90% LTV
There are few lenders who offer 90% LTV mortgages on new builds than on existing properties.
New builds are often more expensive as lenders see them as a bigger risk to lend against. This is because they do not have a history.
Around 20 lenders currently offer 90% LTV mortgage products on new build houses.
Only around 10 offer 90% LTV mortgages for new build flats and maisonettes.
Barclays offer 90% LTV products for houses and 85% LTV products for flats and maisonettes.³
Find out which lender will give you the best deal for your situation by speaking to a mortgage broker.
Second home mortgages 90% LTV
You may be able to get a second home mortgage with a 90% LTV, but you won’t have much choice when it comes to deals.
You may be able to get a second home mortgage with a 90% LTV, but you will not have much choice when it comes to deals.
Very few lenders offer second home mortgages with a 90% LTV.
Most lenders will only give you a mortgage for a second home if you’ve got a 20 to 25% deposit.
If you want to take out a second home mortgage with a 90% LTV you’ll face:
the standard higher 90% interest rates
stricter rules about whether you’ll get one
The second loan increases your risk as a borrower as you’ll have much more debt.
Lenders who do offer this type of mortgage include:
Buy to let mortgages 90% LTV
Lenders do not currently offer 90% LTV buy to let mortgages.
You usually need a deposit of at least 25% of the purchase price for a buy to let mortgage.
Some high street lenders will let you put down 20% and some specialist lenders 15%.
Deposits are higher for buy to let mortgages. This is because lenders tend to think the loan is riskier than for a residential mortgage.
There may be times when the property is unlet, for example, or the tenants do not pay the rent.
Remortgaging onto a 90% LTV deal
If you took out a 95% LTV mortgage, and are coming to the end of your initial deal, you could save money by remortgaging.
If you do not remortgage, your lender will move you onto their standard variable rate. This is usually much more expensive.
If your home's gone up in value, or if you've paid off enough of your mortgage, you'll be able to remortgage to a 90% LTV deal.
This means your repayments should be lower as you’ll be borrowing less.
¹ Money Advice Service: How much deposit do I need for a mortgage?
² Yorkshire Building Society New Build Properties 90% LTV
³ Barclays: New-build mortgages for intermediaries
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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.