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60% LTV mortgages
A 60% mortgage allows you to borrow up to 60% of a property's value, while you provide the remaining 40% as a deposit.
Finding the right 60% LTV mortgage deal can be tricky. So, let Mojo’s expert comparison call compare deals to find your best 60% LTV mortgage rate.
What is a 60% LTV mortgage?
A 60% loan to value (LTV) mortgage is available when you have a deposit of at least 40% of the value of the property. This lower LTV is often sought by home movers and those remortgaging who have built up significant equity in their property.
Because you're borrowing a smaller percentage of the property's value, lenders typically view you as a lower risk. This should help you to access more competitive mortgage rates.
How do 60% LTV mortgages work?
With a 60% mortgage, you put down a deposit worth 40% of the property value – the remaining 60% is funded by the lender as a mortgage. The actual mortgage works the same as any other mortgage deal – you repay the amount you've borrowed, plus interest, over a predetermined time period (this is your mortgage term).
Some 60% mortgages are repaid on an interest-only basis. However, if you're buying a residential home, it's more likely that you will have a capital repayment mortgage where you repay an element of the loan and the interest each month. A 60% mortgage is generally considered to be a low loan-to-value. If you are providing a 40% deposit, the mortgage interest rates available to you will be some of the best on the market.
Find out how much the deposit and mortgage loan amount would be for a 60% LTV mortgage for a range of different property values.
| Property value | Deposit amount (40% of property value) | Mortgage loan amount (60% of property value) |
|---|---|---|
| £200,000 | £80,000 | £120,000 |
| £300,000 | £120,000 | £180,000 |
| £400,000 | £160,000 | £240,000 |
| £500,000 | £200,000 | £300,000 |
| £600,000 | £240,000 | £360,000 |
Why get a 60% LTV mortgage?
A key reason to aim for a 60% mortgage is that the lower your LTV ratio, generally the lower your mortgage rate will be. This is because the lender will consider you a less risky borrower, and so may loan you money at a more competitive rate.
With less to borrow, you'll pay less in interest over the course of your mortgage too. You may also be able to repay it quicker than if you borrowed a greater percentage of the property value.
In the current market, where interest rates have seen fluctuations, securing a lower LTV can help you access better deals and reduce overall borrowing costs.
Can I get a 60% mortgage?
To be eligible for a 60% LTV mortgage, you will need to save up a deposit of 40%, which may not be easy for most first-time buyers to save.
Most people raise the money for a 40% deposit when they've already owned property before, typically from the sale of their home, or savings built up over many years. Of course, you'll also need to meet the lender's other criteria, which, in addition to deposit size, often includes:
Income - you can typically borrow around 4 to 4.5 times your annual income.
Expenditure - lenders will look at your spending habits and outgoings in addition to your income to check you can afford the monthly repayments.
Credit history - checking your credit history allows lenders to see if you have a history of managing debt well
Compare 60% mortgages
Whether you're remortgaging, moving or considering putting down a large deposit on your first home, speak to our broker partner, Mojo, to discover your mortgage options.
Advantages of 60% mortgages
A low LTV ratio generally allows you access to better mortgage rates and deals
You'll have borrowed less compared to a higher LTV ratio, meaning you'll pay less in interest overall
Due to a lower loan amount, you may prefer to opt for a shorter mortgage term
You're less likely to fall into negative equity compared to if you put down a smaller deposit
Disadvantages of 60% mortgages
It can take a while to save up a 40% deposit, so if you're a first-time buyer you may be able to purchase a home sooner with a higher LTV deal
You may wish to hold some of your mortgage deposit money back for home renovations or an emergency fund
What types of 60% LTV mortgage rates could I get?
With mortgage deals, there are two main types of mortgage rate you can get – fixed and variable.
Fixed mortgage rates
A fixed mortgage rate means your interest rate (and therefore monthly repayments) will be fixed for the duration of your deal. This gives you budget certainty even if interest rates rise, though you won't benefit if rates fall.
Fixed rate deals typically have higher rates than variable rate mortgage deals as the rate will remain the same over the deal period, while discounted and tracker rates are subject to change.
Two-year fixed-rate mortgages and five-year fixed-rate mortgages are the most common deal lengths, but you can get longer deals. How long a deal you should opt for depends on you and your personal circumstances, including how long you expect to stay in the property for and whether you'd like repayments to remain the same for a longer period of time.
Variable rate mortgages
A variable mortgage rate is subject to change during your deal. This means your monthly repayments won't necessarily stay the same - they may increase (or decrease) depending on mortgage interest rate fluctuations. So make sure you could afford repayments if interest rates did rise substantially.
There are three main types of variable rate mortgages:
Discount mortgage – the interest rate is pegged at a certain level below the lender's SVR.
Tracker mortgage – the interest rate is set a specific level above an external financial indicator, often the Bank of England (BofE) base rate.
SVR – you'll normally go onto your lender's SVR once your initial deal comes to an end. This is often higher than the rate you'll have been paying so it's often worth remortgaging in order to get the best deal, unless you're moving or only have a small amount to pay off on your mortgage.
In the current market, interest rates are fairly high, so a 60% LTV mortgage is a good option if you're able to raise the 40% deposit. This is because you'll generally get access to better deals than with a higher LTV mortgage”Jason McDonald, Mortgage Expert
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60% LTV mortgage FAQs
What 60% LTV mortgage rates could I get?
You will likely be able to access some of the most competitive rates when you opt for a lower loan-to-value mortgage, like a 60% mortgage.
That's because a lower loan-to-value signifies less risk for the lender. As you'll hold more equity in the property from the outset, it's more likely a lender will be able to recover any outstanding loan amount should you default on your mortgage repayments.
Can I get a 60% mortgage with bad credit?
If you've got bad credit and are looking for a mortgage, having a larger deposit may help encourage some lenders to consider you as this will reduce the risk slightly. However, having a 40% deposit is still not a guarantee that you'll be accepted.
If you've got bad credit, it's worth taking steps to try and improve that (by taking out a credit building card for example) and speaking to a mortgage broker who can help identify lenders who may be willing to consider you.
Can I get a 60% LTV buy-to-let mortgage?
Yes, you should be able to find lenders offering buy-to-let mortgages with a 60% loan-to-value. Buy-to-let mortgages generally require larger deposits, often around 25% but some lenders ask for even more. If you have a 40% deposit ready to go, this could align nicely with the higher deposit requirements.
Keep in mind that lenders will also factor in things like your potential rental income and financial situation when considering whether to lend you the money you need.
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YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
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