Only got a small deposit? Simply Lending Solutions could help you find a high loan-to-value mortgage
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High Loan to Value Mortgages
One of the first pieces of advice borrowers often hear when searching for a mortgage is “try and get a large deposit together”. But what if you can’t? Does that mean you won’t be able to get a mortgage at all? This is not necessarily always the case and speaking to Simply Lending Solutions will clarify your options.
Simply Lending Solutions finds mortgages for people with small deposits every day. Our CeMAP qualified brokers work across the whole of the mortgage market and aren’t tied to only 1 lender; giving us access to a wide selection of all the mortgage deals available.
We work in partnership with you to find the most appropriate mortgage deal for your circumstances. We do all the hard work, so you don’t have to.
Small deposits & high loan-to-value mortgages
When we talk about mortgages for would-be borrowers with a limited deposit, you’ll see the term high ‘loan-to-value’ or LTV mortgage. The term loan-to-value relates to the ratio between the value of the mortgage loan you take out and the value of the property as a whole. The difference between the loan value and the property value is paid as a deposit.
If you only have a small deposit, the amount of loan you will need will be greater than that required by someone with a large deposit; therefore, the loan-to-value will be greater.
For example, if you want to buy a house worth £250,000 and you have a deposit of £50,000 you will need a loan of £200,000. Your LTV will be 80% as £200,000 is 80% of £250,000. However, if you only have a deposit of £12,500 you will need a mortgage with a loan-to-value of 95% as the necessary loan of £237,500 is 95% of the total value of the property.
While there are fewer high LTV mortgages available than there were before the 2007 financial crash, working with a mortgage expert like the ones at Simply Lending Solutions can still let you find one.
The pros & cons of high loan-to-value mortgages
The biggest advantage of high LTV mortgages is of course that you need a lower deposit. If you’ve read this far that’s probably not something you have much choice over, but it’s reassuring to know that your small deposit isn’t necessarily a barrier to purchasing a home.
The lower deposit requirement also means that you can act more quickly if you are keen to move on a particular property or if you sense that house prices are starting to rise.
Compared to lower loan-to-value mortgages, high LTV mortgages may have higher interest rates, although working with a professional mortgage broker maximises your chances of finding a competitive deal. There will be fewer mortgage products available to you, having a said that a whole of market broker can clearly offer you more choice than a broker tied to one bank or lender.
Finally, in the event of house prices falling the fact that your loan is larger puts you in danger of falling into negative equity. This is more of a danger if you are intending to buy and sell within a relatively short time period, as house prices tend to stabilise and rise over time.
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Can I get a mortgage with no deposit?
It’s not impossible but in general the only type of no deposit, or 100% mortgages, that are available are what’s known as springboard or family guarantee mortgages. With this type of mortgage, a family member or friend, puts cash into a lender savings account or a cross charge is made on their property to guarantee the mortgage for a specific period of time (usually 3 years). Once the guarantee period has elapsed, the funds are returned.
As these deals are relatively uncommon the best option is to put together a deposit, no matter how small.
How to put together a deposit for a mortgage
When money is tight it may seem impossible to get funds together for a mortgage deposit. However, there are some things you could consider
- If you’re renting, consider downsizing in order to save money
- Think about moving back in with parents
- See if receiving a gift from a family member towards your deposit is a possibility (for reference cannot be called a loan for mortgage criteria)
- Talk to your mortgage broker about schemes that may make it easier to find a home
This is just a snapshot of your options. For more detail read our guide to saving up a mortgage deposit.
Speak to Simply Lending Solutions about finding a high LTV mortgage
Speaking to a Simply Lending Solutions broker can be your first step to finding a suitable mortgage, even if you only have a small deposit.
As whole of market brokers we have great relationships with high LTV mortgage lenders who are offering 90% and even 95% LTV products. We can also give you advice about other options that you may have, such as considering Help to Buy or shared ownership schemes.
If you’re lucky enough to have been gifted money toward a deposit by either a friend or a family member, we have relationships with lenders who can consider you for a springboard mortgage
Most importantly we’ll ensure that we look carefully at the individual circumstances of your case and use our expert knowledge of the market to find a lender that we think will be most likely to approve your application.
Simply Lending Solutions understands that the mortgage market is extremely fluid, so it’s vital that you work with a company like ours that is always aware of the options available to you, if new products come onto the market, we’ll know about them.
Using Simply Lending Solutions allows you to get on with your life, while we search the deals on your behalf.
Uncomplicated mortgage application process
Simply Lending Solutions prides itself on its straightforward application process that makes things stress-free for you.
We start with a free consultation where we discuss your requirements in order to understand what you’re looking for and what you most suitable options may be
You then leave it to us to explore the market to find a deal for you. We won’t need to bother you unless we need some additional details.
Once we’ve pulled together a selection of options for you, we’ll go through them with you. We’;ll highlight any fees that would be payable, any documentation that’s required and anything else of importance.
Simply Lending Solutions then underwrites your preferred deal in-house. We do this in order to allow the application to proceed more smoothly once it is passed to the lender.
We request any final documents from you, then make the application. All that we need to do next is wait for the formal mortgage offer from the lender
Once we have the offer, and if you’re still happy, everything is passed to lawyers for exchange of contracts and completion.
Our fees become payable only when you offer is received. Except in some remortgaging cases, when you only pay on completion.
What types of mortgage could you get with a small deposit?
The size of your deposit dictates the loan-to-value of your home mortgage rather than determining what type of mortgage you can get. As we’ve mentioned though there may be some schemes, such as Help to Buy and shared ownership that you may be more interested in. Our brokers will always only suggest the most suitable product for you.
In certain circumstances the range of mortgages you could be eligible for include:
- First-time buyer mortgages
- Home mover mortgages
- Springboard mortgages
- Help to Buy mortgages
- Buy-to-let mortgages
- Shared ownership mortgages