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65% LTV mortgages

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What is a 65% LTV mortgage?

A 65% LTV mortgage is any mortgage where you borrow 65% of the property's value and put down the remaining 35% as a deposit.

The proportion of the property's value you're borrowing is known as the loan-to-value (LTV) which is why they're referred to a 65% LTV mortgage.

Mortgage rates are determined by the LTV of your borrowing and lenders typically set them at incremental thresholds, usually between around 60% and 100%. 65% LTV mortgage rates are typically fairly competitive, as borrowing a lower percentage of the property value is seen as less risky by the lender.

How do 65% LTV mortgages work?

For a 65% LTV mortgage, you would pay a deposit worth 35%, and borrow the remaining 65% from a mortgage lender

For example, if you’re buying a £200,000 property, you would need a deposit of £70,000 so would be borrowing £130,000.

The table shows the different deposit amounts you'd need for a 65% LTV mortgage for different property prices.

Property valueDeposit amount (35%)Mortgage loan amount (65%)
£200,000£70,000£130,000
£300,000£105,000£195,000
£400,000£140,000£260,000
£500,000£175,000£325,000
£600,000£270,000£330,000

Is 65% LTV a good ratio?

A 65% LTV ratio is seen as quite low, which usually means you’ll be able to access lower interest rates for your mortgage compared to mortgages with a higher LTV - meaning smaller monthly mortgage repayments.

If you can’t repay your mortgage, as a last resort the lender will have to repossess the property to sell it and get its money back. The lower the LTV the more chance there is that the lender will be able to get enough money to clear the loan. A lower LTV therefore takes away some of the risk for the lender.

Owning a larger proportion of a property is also beneficial as it means you can borrow less, which reduces the amount you'll have to pay in interest overall. To find the best 65% LTV mortgage rates, it's a good idea to compare mortgages across the market set at this loan to value ratio.

How to choose the best 65% LTV mortgage for me

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Am I eligible for a 65% mortgage?

To be eligible for a 65% LTV mortgage the main thing you'll need is a 35% deposit - which you'll normally need to prove came from an approved source.

On top of this, you'll need to meet the lender's other criteria to be successful in your mortgage application.

The main criteria includes:

  • Annual income (you can usually borrow up to around 4.5 times this)

  • Expenditure - lenders normally look at your outgoings to check you can afford repayments

  • Credit history

  • Age - you have to be between the minimum and maximum age requirements, which varies from one lender to the next

Can I get a 65% LTV mortgage with bad credit?

Having a larger deposit will definitely go in your favour if you're looking to get a mortgage with credit issues.

However, whilst it may help, having a 35% deposit won't necessarily guarantee you a mortgage. Whether the lender accepts your application will depend on the severity of your credit issues and other eligibility criteria.

Speaking to a mortgage broker can help if you have bad credit, as they can offer advice on which lenders are more likely to accept you.

What 65% LTV mortgage rates are there?

With mortgages, there are two main types of interest rate - fixed and variable.

Fixed rate mortgages

If you opt for a fixed rate mortgage, this means your interest rate will remain the same for the duration of the deal (often two, five or 10 years, but you can get longer deals).

The main benefit is that your monthly repayments won't rise any higher throughout the duration of the deal, making it easier for you to budget appropriately and make sure you can afford the mortgage.

However, if interest rates were to fall, your rate wouldn't decrease, meaning you wouldn't benefit from lower monthly payments.

Fixed deals often have higher interest rates compared to variable deals, however, bear in mind that a fixed interest rate will stay the same, while a variable rate is subject to change, meaning you could end up on a far higher interest rate if you go for this option.

Variable rate mortgages

A variable rate mortgage has an interest rate that is changeable during the deal period - it can go up or down.

The main types of variable rate mortgage are:

  • Standard variable rate (SVR) - this is the rate you'll go onto after your initial deal has ended and is set by the lender. While it doesn't directly correlate with the Bank of England (BofE) base rate, it's usually influenced by it. It's very flexible with no early repayment charges (ERCs) and often unlimited overpayments, but it's also generally more costly than opting for a fixed, discounted or tracker deal

  • Discounted rate mortgages - the rate is set at a fixed amount below the SVR and will rise and fall alongside the SVR

  • Tracker rate mortgages - the rate is pegged at a set amount above an external financial indicator (often the BofE base rate) and will rise and fall with it

With variable rates, they may come with a 'collar' which means even they won't ever drop below a certain level even if the SVR or base rate drops. Occasionally they may also be capped, meaning the rate will not increase above a certain level, but this is much rarer.

The main thing to remember with variable-rate mortgage deals is that your interest rate could change substantially during your deal. You need to make sure you could still afford monthly repayments even if the rate were to rise significantly at some point.


Advantages of 65% mortgages

  • A 65% LTV mortgage is seen as a low loan to value ratio so you'll generally get access to better rates and deals as lenders will see you as a less risky borrower

  • You'll need to borrow less, compared to a higher LTV mortgage, which means you'll pay less in interest over the course of the full mortgage term

  • You're less likely to fall into negative equity than if you borrow more

Disadvantages of 65% mortgages

  • It might be quite difficult to save up a 35% deposit

  • You may be able to access slightly better deals if you can save up a bit more to raise a 40% deposit, as even the best 65% LTV mortgages are unlikely to compare with a 60% LTV mortgage

  • If you're putting all your savings into a 35% deposit, you may not have the funds available to fund home improvements or for an emergency

Claire Flynnquotation mark

A 65% mortgage is on the lower end of the scale of LTV ratios - this is a good thing in the current market as it means you'll generally get access to better interest rates. However, if you're able to put down a higher 40% deposit, it might be worthwhile as this may get you access to even cheaper deals. ”

Claire Flynn, Senior Content Editor - Mortgages

Find alternative LTV mortgages

Not sure if a 65% LTV mortgage works for you? Take a look at some of the other LTV ratios below. Or learn how to compare our best mortgage rates.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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