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Loan to Value ltv What is it?

Our mortgage advisers can advise and explain to you   what Loan-To-Value means and why it is important to you and your mortgage.
Have you thought about buying or remortgage a property and you always hear  the phrase loan to value?

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In this guide you will learn

·  What a Loan To Value Mortgage?
·
  How to calculate loan to value
·
  What is a good loan to value ratio?
· 
Buy-To-Let LTV Mortgages·   
· 
 Frequently asked questions
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What Is A Loan To Value Mortgage?

When you take out a mortgage, the lender will refer to the ratio, also known as the ‘loan to value.’A loan to value (LTV) mortgage is the size of the loan compared to the total value of the property.

In mortgage terms, it is expressed as a percentage are referred to as loan to value ratio.An example is, if you were to buy a home worth £100,000and borrowed £80, 000, the LTV would be 90%.
Because you would be only borrowing 90% of the value of the property.
You would then provide the remaining 20,000(10%) as a deposit. In this case, your mortgage would be known as a 90% LTV mortgage.

How to calculate loan to value

How to calculate loan to value
To calculate Loan to Value, all you simply need to do is take the amount you want to borrow, divide it by the property price and multiply the result by 100 to get the value.
LTV = (amount of the loan ÷ value of the property × 100) To give a real-life example of this a loan to value below.
"To calculate the LTV, you would work it out as this:"

Generally speaking, a good loan to value rate is 80%. This is because a lender will commonly hope  that the borrower to put down at least 20% of the home’s value as a down
payment.

You can get lower interest charges with this LTV rate than you would with a 90 or95 loan to value LTV.

Of course, if you could pay further than20% outspoken, you would profit from lower interest payments on your mortgage balance. This is because you would be eligible for a mortgage at a lower value LTV rate, similar as a 60% LTV if you were suitable to put down 40% of the property value.

Not only would you qualify for a better mortgage rate if you had a lower LTV, but you would have a wider choice of mortgages to choose from too.

This is because banks and building societies will consider you less likely to overpass on your mortgage than 
someone who wanted to put down a lower deposit. 

So, if your LTV was 75%, you would qualify for a wider range of deals at lower rates and products than notoriety with a 90% LTV, for illustration.

High Loan To Value Mortgages

If you’re not able to put down a large deposit, then you may be eligible for a high LTV mortgage. As we mentioned, these aren’t always ideal.

But if you’re in a rush to get on the property ladder and you can’t afford to pay higher deposit upfront, then you should find a lender that is willing to offer you a 95% or 90% mortgage deal and there are plenty.

Lenders in the past, used to offer home buyers high LTV mortgages, with LTV ratios of 100% and some even 125%. These are not available anymore as banks and building societies consider them to be too high a risk.

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Buy To Let Mortgage Loan To Value

According to the standard, the highest LTV you can expect is 75%. There are a few  banks and building societies that may offer 80% LTV mortgage loans, but the products of these loans will be higher. Banks and building societies believe that the risk of buying a house to let is slightly higher. This is because the borrower’s ability to repay sometimes depends on the income they receive from the tenant. If the property is temporarily vacant, it may be difficult for borrowers to keep up with their repayment plan. In any case, this is what the lender will consider.

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