Leanne Macardle

Leanne Macardle

Editor
Published: 29/01/2019

At a glance

  • The LTV is the percentage of the amount you wish to borrow versus the value of the property. For example, if you want to buy a house worth £200,000 and have an 80% LTV mortgage then you could borrow a maximum of £160,000 and would need a minimum deposit or equity of £40,000.
  • Borrowers with a 20% deposit or 20% equity in a current property are able to apply for an 80% LTV mortgages.
  • Mortgages displayed cover all the major types, e.g. fixed, variable and tracker.
  • You’ll usually find better deals with an 80% LTV mortgage than those with higher LTVs, such as 85%, 90% or 95%.
  • As your house price increases and you reduce the amount you owe on your mortgage, you could qualify for a lower LTV mortgage with a lower rate.

How do 80% LTV mortgages work?

The mortgages displayed on this page encompass all major types, unless you specify otherwise. This could be a variable or a fixed rate deal, depending on the wider mortgage market.

If in the column for mortgage type you see variable, this means that the rate could change at any time if the market or wider economy shifts. If it says discounted variable, this means you’ll get a rate that is a set percentage below the provider’s standard variable rate (SVR) for a certain number of years. A deal that says fixed comes with a rate that can’t change until the initial term of the deal is up. Capped mortgages come with a variable rate that can’t go above a certain amount (but tend to come with higher initial interest rates compared to simple variable rate mortgages), while tracker rate mortgages follow a specific external rate, usually the Bank of England base rate.

As you can see, most deals tend to only last for a certain number of years or even until a specific date. After this initial term is up, your rate with revert to the lender’s SVR unless you remortgage in time. If you find a deal that is ‘for term’, it means that you could have that mortgage for the entire 25 years or so that it would take you to repay the loan (provided you don’t pick an interest-only mortgage, in which case you’d still owe the exact same amount at the end of the term).

While it may be easy to have just one mortgage for the entire loan term and it means you’d only have to pay any product fees once, it’s highly likely that the rate you get won’t be the most competitive on the market, certainly not after a while. That’s why, no matter what kind of mortgage you have, it’s always a good idea to keep an eye on the comparison chart – especially if your initial deal period is about to end.

Finally, before you start applying for mortgages based on the list above, remember that the success of your application will depend on your credit rating, among other things, and that a failed application will decrease your credit score. So, do your homework and improve your score if needed to ensure you’ll be able to get the first mortgage you apply for.

Advantages and disadvantages

As stated, the main advantage of an 80% LTV mortgage is that they’re generally cheaper than 85% or 90% alternatives, and almost certainly a better deal than first-time buyer mortgages. What’s more, thanks to the comprehensive mortgage search, you can tailor your search so you can easily find the most suitable mortgage for your needs, while seeing how much you’d need to pay each month should your application be accepted.

There are a few things to look out for, however. For one, you will notice that many mortgages may come with product fees, which can make the mortgage more expensive over the long run, so keep these extra upfront costs in mind when comparing the products on offer. Another potential disadvantage when it comes to 80% LTV mortgage deals is that if you stick with them for too long, you may be overpaying as you could qualify for a 75% or even 70% LTV mortgage (provided you’re on a repayment deal). This is another reason why it pays to review your mortgage deal every half year or so.

When looking at the details of any mortgage it’s also a good idea to see what the early repayment charges would be and if your mortgage is portable. This way, you will already know what you’d need to pay if you needed to remortgage early for whatever reason and you’ll be prepared if you decided to move home – not all mortgages allow you to port the deal over to a new home, and the ones that do allow it may require additional fees to be paid.

Mortgage calculator

Our mortgage calculator helps you to see how much your mortgage might cost you each month.

Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.

Read our How much can I borrow for a mortgage guide to find out more about what can impact your potential sum of borrowing.

Pros And Cons

  • Less expensive than higher LTV mortgages. An 80% LTV mortgage is typically cheaper than the 85% or 90% LTV alternatives.
  • A range of different 80% LTV mortgage deals. You will find a range of 80% LTV mortgages, including differing terms such five-year fixed and different interest rate types including fixed and discount variable rates.
  • Potential to cost you more.  Be sure to calculate your LTV. A greater deposit reduces your LTV and as a result can often reduce your initial mortgage rate. LTVs tend to work in multiple of 5 or 10, so if you already have the 20% deposit/equity you need to apply for an 80% LTV mortgage, you may want to consider waiting and increasing your deposit to 25% to access a lower rate mortgage.

 

Should I use a mortgage broker?

If you’re still not sure what kind of mortgage is right for you, you could consider using a mortgage broker. Not only can they provide valuable advice, but they may also have access to 80% LTV mortgage deals that are not available directly and therefore not on our charts.

However, keep in mind that you will have to pay a fee for such a service. Of course, it’s entirely possible that you will end up saving money anyhow thanks to the broker finding you a cheaper deal than you would have been able to get on your own, but it’s up to you whether you want to try talking to an adviser or go it alone – you can easily request a callback here.

Moneyfacts tip Leanne Macardle

Mortgage brokers could have access to 80% LTV mortgage deals that aren’t available directly to you.

Alternatives

It’s easy to change the calculator above so you are looking at mortgages with different LTVs or focus on a specific type. If you know exactly what kind of mortgage you want, you could also make things easy for yourself by going directly to the relevant comparison chart.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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At a glance

  • The LTV is the percentage of the amount you wish to borrow versus the value of the property. For example, if you want to buy a house worth £200,000 and have an 80% LTV mortgage then you could borrow a maximum of £160,000 and would need a minimum deposit or equity of £40,000.
  • Borrowers with a 20% deposit or 20% equity in a current property are able to apply for an 80% LTV mortgages.
  • Mortgages displayed cover all the major types, e.g. fixed, variable and tracker.
  • You’ll usually find better deals with an 80% LTV mortgage than those with higher LTVs, such as 85%, 90% or 95%.
  • As your house price increases and you reduce the amount you owe on your mortgage, you could qualify for a lower LTV mortgage with a lower rate.

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