A 90% is suitable for those with existing mortgages and those looking to get on the property ladder with a smaller deposit.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
A 90% LTV mortgage is a higher loan-to-value ratio mortgage that is more readily available than 95% or 100% LTV mortgages, but how do they work and what should you be aware of?
A 90% loan-to-value ratiomortgage refers to the amount you are borrowing (90%) in relation to the value of the property.
The difference between the two, the 10%, is the deposit you need to put forward.
The higher the ratio between the borrowing amount and the value of the home, the higher the risk for the lender.
A 90% LTV mortgage is typically more expensive than a lower ratio mortgage because of the risk to the borrower.
To compensate for this risk the lender will typically charge you a higher interest rate, which will add up over the lifetime of the mortgage.
Therefore if you can afford a lower interest rate by putting forward a larger deposit you should consider it.
While taking a lower LTV ratio mortgage will probably lead to a lower interest rate and hence lower costs over the lifetime of the mortgage, you should consider your savings.
The costs of buying a property include stamp duty, solicitor’s fees and mortgage arrangement fees.
Furthermore a house can lead to many unexpected costs, like repairs or fixing small problems around your property. Therefore you should always keep a portion – typically 5% to 10% of the total property value – in reserve.
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