What is a 85% LTV first-time buyer mortgage?

An 85% LTV (loan-to-value) first-time buyer mortgage means that you need to be able to provide a 15% deposit, in order to get the mortgage deal. It can be an attractive proposition for first-time buyers as it means only having to save 15% of the value of the property to get onto the property ladder.

Is a 85% LTV first-time buyer mortgage right for me?

A 85% LTV mortgage could be for you if you’re only able to save a 15% deposit, but it’s important to consider the rate you’ll have to pay. Often, a higher deposit equates to a lower rate of interest and vice versa, which means that a 85% LTV mortgage will often charge a higher rate than a lower LTV. For this reason, if you can save a bigger deposit it is advisable to do so, as it will mean you are paying less interest and will have lower repayments. Saying this, it is common for first-time buyers to opt for a 15% deposit mortgage as it means getting onto the property ladder quicker than waiting to save more.

What about higher FTB LTVs?

While a 90% LTV is a common option for first-time buyers, there are plenty of others to consider, including 95% LTV and even 100% LTV mortgages if you can’t save a 10% deposit. If you are tempted with these options, it is important to remember that they normally come with a higher interest rate and can end up costing more money in the long run. This is because choosing a higher LTV will typically mean higher mortgage repayments each month, or needing to take out a much longer mortgage term – the latter can improve affordability, but also means you’ll be paying the mortgage off for longer, so it’s important to consider all the options.

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