85% LTV mortgages

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What is an 85% LTV mortgage?

An 85% loan-to-value (LTV) mortgage is where you borrow 85% of the property's total value. The remaining 15% is made up by the deposit you put down.

85% LTV is considered one of the higher loan-to-value ratio mortgages, so you would usually pay a higher interest rate than someone who offers a 25% deposit, for example. This because the larger the deposit, the less risk is involved for the lender.

How does an 85% mortgage work?

With an 85% mortgage, you borrow 85% of the property value from a mortgage lender and provide the remaining 15% through your deposit. Every mortgage product has slightly different terms, but no matter whether you choose a fixed-rate or variable rate, or you go for an interest-only or capital repayment deal, an 85% mortgage works in this way.

For example:
To buy a property worth £150,000, at 85% LTV you would need to put down a deposit of £22,500, and would borrow the remaining 85%, or £127,500

This table shows how much deposit you'd need for an 80% mortgage for different property values. This might help you decide if a 15% deposit is within your reach.

Property Value	Loan size at 85% LTV	Deposit requirement
150,000	127,500	22,500
300,000	255,000	45,000
450,000	382,500	67,500

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YOUR 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.

Lending criteria for 85 LTV mortgages

The deposit amount is a key element of the lending criteria – you'll need a 15% deposit to be eligible for an 85% mortgage. You'll also typically need to prove that it's come from an approved source.

Other criteria can vary between lenders, but is likely to include:

Income – Around four-and-a-half times your annual income is the average loan size offered, but some lenders also have a minimum income requirement
Your outgoings – the lender wants to know you can afford the repayments based on your current spending habits
Credit history - the lender wants to know you are reliable at managing debt and will look at your credit history to determine this
You will have to be within the minimum and maximum age restrictions

A mortgage broker can advise you on the lending criteria of each provider to make sure you only apply for mortgages suited to you.

Can I afford an 85% LTV mortgage?

What you can afford is largely determined by your deposit and what you can afford to pay back each month, but you should always leave some money aside for additional costs.

For instance, if your property is over the Stamp Duty threshold of £250,000 (£425,000 for first-time buyers) you will have to pay stamp duty. This is a government tax that applies in England and Northern Ireland that is charged as a percentage of the property’s purchase price.

You will also have solicitor and mortgage arrangement fees to consider, as well as the mortgage arrangement fee and any potential repairs you may have to undertake on your new property.

It’s also a good idea to have three to six months of household bills and expenses (including your mortgage payments) in an accessible savings account for unexpected costs.

Can I get an 85 LTV buy-to-let mortgage?

There are very few buy to let mortgages that will offer a mortgage if you only have a 15% deposit, but you may be able to find one or two specialist providers that will, depending on your circumstances.

Most buy to let lenders require a minimum deposit of at least 20 - 25% and possibly as much as 40% in some cases

Portfolio landlords who have several properties can often use the equity in their other properties to secure borrowing, however. It's worth speaking to a mortgage broker to discuss your buy-to-let mortgage options.

While there are many more 90% and 95% mortgage deals available than there have been in previous years, if you're able to save up a bit more, you'll generally be offered better interest rates”

Kellie Steed, Mortgage Content Writer

Alternatives to 85% LTV mortgages

Unsure whether you can afford a 15% deposit, or want to see if a lower LTV product might suit you better? Find out about our best mortgage rates and deals or compare different LTV products by clicking the links below.

Read one of our articles below or browse our full selection of mortgage guides.