Compare 85% LTV mortgage rates and repayments

LTV means loan-to-value – it’s the size of your mortgage as a percent of the total property value. In other words, how much of the value of the property that you’re borrowing. A 85% LTV mortgage is 85% loan, 15% deposit or equity.

Say you want to buy a property worth £250,000. A 85% LTV would mean you have a deposit (or equity) of £37,500, so the amount you’re borrowing is £212,500.

LTV is calculated as a percentage – how much you’re looking to borrow versus the value of the property you’re purchasing or remortgaging.

If you know how much you’ll need to borrow, just divide the mortgage amount by the value of the property. To use the same example, £212,500 ÷ £250,000 = 0.85 – multiply that by 100 and you get 85% LTV.

If you know how much deposit you have but don’t have a property in mind yet, multiplying your deposit amount by 6.67 will let you see approximately what you could buy at 85% LTV.

LTV is important to think about because it determines the mortgage rate, and affects how lenders calculate whether the mortgage is affordable for you. The lower your LTV, the lower the rates, and the more mortgage options you’ll have.

An 85% LTV mortgage is in the middle of the typical range – usually, lenders offer LTVs between 50% and 95%. With an 85% LTV, you’ll have plenty of good options to choose from, but it could be worth thinking about whether you’re able to lower your LTV to 80%, which could open up many more options with better deals and a lower total cost, meaning you’ll pay less in the long run. A mortgage expert can talk this through with you.

This comparison tool searches the whole market for mortgages that match your needs. If you find a deal you like, we can help you apply for free.

To use the tool, enter your information. We'll need to know:

• How much you want to borrow
• How much the property you're thinking of buying costs
• What type of interest rate you want – fixed or variable (more on this in a minute)
• How long you want to borrow for (the term)
• Whether you're going to live in the property or rent it out
• Whether you're buying a new property or remortgaging your old one

The tool will search the market for deals that match your requirements and list the results.

We order the results from lowest to highest monthly repayment. You can also sort the results from highest to lowest if you prefer.

Feel free to experiment with different numbers to see if you could get a better deal.

If the LTV – the percentage of your home's value which you're going to borrow – is high, for example 89%, try lowering it to 85% to see what happens to the interest rates and monthly repayments.

Or you could try lengthening and then shortening your term. For example, you could see how changing your mortgage term from 25 years to 20 years would affect your monthly repayments.

If you find a mortgage deal you like, you can apply with Habito fast, online, and free. We’ll make sure you’re eligible for that mortgage and do all the hard work to secure it.

This comparison tool is better than other online comparison tools for two reasons – even if we say so ourselves.

1. It scans the whole market, not just a section of it.

   We search through thousands of mortgages from over 90 lenders and show you real deals they're offering their customers right now.

   This means you can get a complete picture of what kinds of mortgages you can expect to find.

2. We’ll show you the total cost of each mortgage over the initial period.

   Alongside the interest rate and monthly repayments, we'll tell you how much you'll have to pay during the initial period of each mortgage when you factor in fees and any benefits like cashback.

   So if you're looking for a mortgage with an interest rate fixed for two years, for instance, we'll work out how much you'll pay in interest and fees over those two years. We’ll also factor in any benefits like cashback.

   This gives you a much more accurate picture of which deals are cheapest.

We sort the results by the total cost over the initial period of the mortgage because this lets you make fairer comparisons.

Most banks only advertise the interest rate, and this is what most people look at. But while the interest rate is important, because you'll be paying it every month for the whole term of the mortgage, the fees you have to pay to set up the mortgage can make a big difference to how much a deal costs overall.

Similarly, cashback and other perks can make up for a slightly higher interest rate or fees.

This varies from one lender to another, but as a rule you can expect to pay at least some of the following:

• A booking fee

  You'll have to pay this when you file your mortgage application. It's usually between £99 and £250 and non-refundable, so you won't get it back if the mortgage falls through for any reason.

• A arrangement fee

  This covers the cost of setting up your mortgage.

  Unlike booking fees, you only pay this if your mortgage application goes ahead. That said, it's quite steep. Typically, you'll pay around £999, but it could stretch to £1,499 or even £1,999.

• A valuation fee

  Because you're borrowing against the value of your property, your lender will want to make sure you're paying a fair price for it. At the lower end of the spectrum, these surveys cost around £150. But they can stretch to £1,500.

  Bear in mind that a valuation survey will only check that the property is worth what you're paying for it. If you want to check for structural problems or other issues with the building, you'll need to commission an independent property survey (more on this below).

• A mortgage account fee

  This is also known as an exit fee. Lenders charge it to cover the cost of maintaining and closing your account. You can expect to pay around £300.

Alongside your lender's fees, there are also other fees and costs you should be aware of:

• Solicitors' fees

  You'll need a solicitor to handle legal work like checking the property deed and transferring the title of ownership. Fees vary a lot by solicitor, location, and property value. But you'll usually pay between £1,000 and £1,500.

  If you're remortgaging – that is, replacing your old mortgage with a new one on the same property – the fee will usually be lower. Because you're not moving home, remortgages are usually less work for your solicitor.

• Survey fees

  A survey is optional but highly recommended, because it tells you whether there are any serious issues with your property you should know about. Fees start at £400, but getting one done could save you thousands in unexpected repairs later.

• Bank charges

  Typically, your lender will transfer the mortgage money to your solicitor, who will then forward that money to the seller together with your deposit. Both your lender and your solicitor can pass on the cost of the transfers to you. This is usually between £25 and £50 per transaction.

• Broker fees

  Some mortgage brokers charge a fee for their services. If they do so, they should tell you about it up front.

• Agency fees

  Selling your old property to buy a new one? Your agency will charge fees for marketing your property and take a commission on the sale.

• Stamp duty

  This is a tax you pay when you buy your main residence. In Scotland, it's known as land and buildings transaction tax. And in Wales it's called land transaction tax.

  How much stamp duty you have to pay depends on the price of your property and where you live in the UK. Here are the stamp duty rates in the UK as from 1 October 2021:

  England and Northern Ireland	Scotland	Wales
  0% on the first £125,000 (First time buyers pay 0% on the first £300,000, as long as the property doesn't cost more than £500,000. They pay 5% on the next £300,001 to £500,000.)	0% on the first £145,000 (First time-buyers pay 0% on the first £175,000)	0% on the first £180,000
  2% on £125,001 to £250,000	2% on £145,001 to £250,000	3.5% on £180,001 to £250,000
  5% on £250,001 to £925,000	5% on £250,001 to £325,000	5% on £250,001 to £400,000
  10% on £925,001 to £1,500,000	10% on £325,001 to £750,000	7.5% on £400,001 to £750,000
  12% on £1,500,001 and up	12% on £750,001 and up	10% on £750,001 to £1,500,000
  		12% on £1,500,001 and up

• Home insurance

  On average this costs £142 a year. It's usually part of your mortgage's terms and conditions - your lender will ask you to insure your home for enough money to cover the cost of rebuilding the whole property. Just in case.

If you're overwhelmed by how much there is to think about when buying a property we can help. Habito can sort almost everything you need with our complete home-buying service.

LTV – loan to value – is the percentage of your home's value which you're going to borrow as a mortgage. So if you're buying a house worth £200,000, paying a £20,000 deposit, and borrowing the remaining £180,000, your loan to value will be 90%.

Typically, the higher your loan to value, the higher the interest rate. By contrast, the lower your loan to value, the lower your interest rate. This is because a higher loan to value means more risk for your lender. You've borrowed a big chunk of your home's value, so the lender could lose more money if your circumstances change and you can no longer meet your repayments.

Most lenders work out loan to value in bands: 60%, 70%, 75%, 80%, 85%, 90%, and 95%. Every time you hit a lower band, it unlocks lower interest rates, which could mean a cheaper mortgage.

For this reason, if you're between bands – for example, your loan to value is 87% – it's worth seeing if you could bring it down to 85%. You can do this either by increasing your deposit or by paying the same deposit on a cheaper property.

Needless to say, while loan to value can make a big difference to the type of deal you get, it's not the only factor. We'll talk about what other factors can affect what mortgage deal you can get in more detail in a second.

The single biggest factor that affects what mortgage deal you can get is your income.

As a rule, you can't borrow more than 4.5 times your total annual income. So if you earn £60,000 a year, the most you'll be able to borrow is £270,000. Limiting how much you can borrow keeps your repayments affordable, which lowers your lender's risk.

Other factors that can affect your mortgage deal include:

• Your expenses

  If you have a lot of debt relative to your income – this is known as your debt-to-income ratio – lenders may let you borrow less than if you had less debt.

  Again, the idea is to keep your repayments affordable. Adding a big mortgage on top of credit card debt, a car loan, childcare costs, and other expenses increases the risk you may not keep up with repayments. And if you can no longer pay your mortgage, your lender risks losing money.

• Your credit history

  Lenders look at this to see how you've handled your debts in the past. If you've had trouble keeping up with repayments, lenders will see you as more risky. As a result, some may charge you higher interest or ask you to pay a bigger deposit.

• Your age

  Most mortgages end when you reach retirement age. Once you retire, your income is usually more limited, so most lenders will want their money back before then.

  As you get older, lenders will offer you shorter terms, so your monthly payments will most likely be bigger. You'll have to prove you can afford to make these larger repayments.

  That said, it is possible to get a mortgage after you retire, as long as you can prove your pension or income from other sources like investments is enough to cover the repayments.

  Alternatively, you could consider:

  • A guarantor mortgage. Here, someone you trust commits to paying your mortgage if you can't afford it anymore
  • A lifetime mortgage. Here, you borrow money against the value of your home without making any repayments. You'll need to have paid off most or all your mortgage to qualify. The lender will sell your home to make their money back when you pass away or go into long-term care
  • A home reversion scheme. This involves selling your home to an equity release company. You'll be able to continue living there until you go into long-term care or pass away, after which the company will sell it

A fixed rate mortgage's interest rate stays the same for a specific period of time, usually two, three, five, or ten years.

By contrast, a variable rate mortgage's interest rate can fluctuate at any point in your mortgage term.

There are two types of variable interest rates.

A tracker rate follows – or tracks – another interest rate for a specific period of time.

The tracked rate is usually the Bank of England's base rate. If the base rate goes down, the tracker rate goes down too. And if the Bank of England's base rate goes up, the tracker rate will also go up.

You can get a tracker rate for two, three, five, or ten years, or for the full term of your mortgage.

The second type of variable interest rate is the standard variable rate. This is your lender's default rate and it's usually higher than their fixed or variable tracker interest rates

Some lenders also offer a third type of variable-rate mortgage known as a discounted variable rate mortgage. This is essentially the lender's standard variable rate with a discount applied, either for a fixed period or for the whole term. So if the lender's standard variable rate is 3%, for instance, the discounted rate might be 2.1%

When the fixed or tracker rate period on your mortgage ends, your lender will put you on their standard variable rate. Your mortgage repayment will usually go up as a result, so it's worth checking if you could save money by remortgaging

Fixed rate and variable rate mortgages both have their pros and cons.

The main advantage of a fixed rate mortgage is that your monthly payments will stay the same for as long as your interest rate is fixed. So if you have a fixed rate mortgage for 5 years, your monthly repayments will be exactly the same for the next five years, even if the Bank of England's base rate goes up.

Of course, this works both ways. So if the base rate goes down, you won't benefit. Your interest rate will still stay the same.

The main disadvantage of a fixed rate mortgage is that it's less flexible than variable mortgages.

As a rule, you won't be able to overpay more than 10% a year.

Let's say you've borrowed £150,000. Your mortgage is fixed for 5 years.

If your financial situation improves and you decide you want to pay off your mortgage more quickly, the most you can overpay is £15,000 a year. You'll get charged a penalty for anything above that.

Fixed rate mortgages also have early repayment charges. So if you think you might move home within your mortgage's fixed rate period, a tracker mortgage may be a better option.

Alternatively, ask your lender if the mortgage is portable. This means you can use the mortgage to pay for part of a new property and avoid the early repayment charge.

The main disadvantage of a variable rate mortgage is that the interest rate can fluctuate at any time. If it changes enough, your monthly repayment can become more expensive.

Of course, interest rates can also go down, which means your monthly repayment could go down.

Variable rate mortgages are also more flexible. There are usually no early repayment charges or overpayment limits.

In a repayment mortgage, your monthly repayment is split into two parts. One part pays off the money you've borrowed, and the other part pays off the interest.

Repayment mortgages have two advantages.

Firstly, over the term of the mortgage, your loan to value – the amount you've borrowed relative to how much of your home you own – will go down. This is because you're paying off the money you borrowed to pay for your property.

Secondly, at the end of the term, you'll have paid off all the money you've borrowed, plus interest, and you'll own your home outright.

The flipside is that, because you're paying off what you've borrowed and the interest at the same time, the repayments are higher.

Interest only mortgages have lower repayments, because you only pay off the interest on the mortgage.

Their disadvantage is that your repayments don't cover the money you've borrowed. So, when your mortgage ends, you'll have to have saved enough money to pay it off. If that's not possible, you'll have to sell the property to cover the debt.

Most residential mortgages, that is mortgages on properties you live in, are repayment mortgages. Buy-to-let mortgages are usually interest only.

As a rule the mortgage deal that's best for you is the one that lets you borrow as much as you need as cheaply as possible.

That said, price isn’t everything. Depending on your circumstances, a slightly more expensive deal might be better for you than the cheapest one available.

Here are some of the things you might want to consider when comparing mortgages:

• The interest rate

  The interest rate makes the single biggest difference to how much your mortgage will cost. This is because you'll have to pay interest each month for as long as you have a mortgage.

  To make comparisons easy, lenders advertise their 'typical' or 'representative' APR (annual percentage rate). According to the Financial Conduct Authority's rules, 51% of customers must get this or a lower rate for the lender to be able to advertise it as typical or representative.

  That said, the interest rate you end up getting depends on your personal circumstances. There's no guarantee you'll get the typical APR (or a lower rate).

  Whether you choose a fixed or variable rate mortgage also makes a difference. Fixed rate mortgages tend to have slightly higher interest rates than variable rate mortgages. But your rate is locked in for a set period, so your monthly repayment can't change.

  Of course, a variable interest rate won't necessarily go up, it could also go down. But you can't know for sure.

• Fees and benefits

  While the interest rate has the biggest effect on the cost of your mortgage, other fees and charges can also add up. A mortgage with a higher interest rate and low fees may work out cheaper than one with a low interest rate and high fees.

  On the other hand, cashback and other perks – a discount on your home insurance, for example – can make up for some of the fees.

  To give you the complete picture, this comparison tool shows you the total cost of your mortgage – interest, fees, plus any benefits like cash back – during the initial period of your mortgage. We talk about mortgage fees in more detail above.

• The standard variable rate

  This is the default rate your lender will switch you to when the initial period on your mortgage ends.

  Bear in mind that the standard variable rate is usually a fair bit higher than the rate during the initial period of your mortgage, so your repayment will likely increase quite a bit. That said, a high standard variable rate isn't necessarily a deal-breaker. You could look into remortgaging once your initial period expires.

• The mortgage term

  The standard term for most mortgages is 25 years, but you can take a longer or shorter mortgage depending on your age and financial situation.

  Monthly repayments are lower on longer mortgages, but you'll pay more interest. In comparison, mortgages with shorter terms have higher repayments, because you're spreading the loan over fewer years. The flipside is that you'll pay less interest overall.

• The fine print

  While cost is important, you should also think about how the mortgage fits into your long-term plans.

  Think you might want to go back to uni or start your own business? Check if the mortgage lets you underpay or take a payment holiday.

  Similarly, if you think you'd like the option of overpaying – or you think you might move home again in the next two to five years – check what the lender's overpayment and early repayment policies are.

  Sometimes, it may be worth getting a slightly more expensive mortgage if it offers you more flexibility.

Yes, you can use this tool to compare buy-to-let mortgages. To do this, answer 'Do you plan to live in it or let it out?' with 'Let it out'.

Bear in mind that buy-to-let mortgages are different from residential ones – mortgages for a property you plan to live in yourself. The lender won't look at your income. They'll look at how much you could earn from renting the property, so you can usually borrow more.

The catch is that you'll have to meet stricter criteria for your application to get approved. Most lenders will expect you to:

• Be aged 21 or older
• Earn £25,000 a year or more
• Pay a 25% deposit or more
• Prove you could rent the property for 25% to 30% more than your mortgage repayment

The criteria are stricter because buy-to-let mortgages are more risky for your lender. When you don't have a tenant, you'll have to pay your buy-to-let mortgage repayments, the costs of your rental property, like electricity and gas bills, plus your own mortgage and living expenses.

You should also remember that buy-to-let mortgages are usually interest only. This means your repayments only cover interest, so you'll need to find some other way to pay off the amount you've borrowed.

You can also use this comparison tool to compare remortgages. Press the 'remortgage' button under 'What's the mortgage for?'

First things first, bear in mind that our tool only shows you the best rates available. It doesn't necessarily mean you're eligible for all those mortgages, or that you'll get the advertised rate. The lender will assess your circumstances and make a decision about whether to give you a mortgage, how much to lend you, and on what terms.

This is where Habito comes in.

We'll help you understand which mortgage you're most likely to qualify for and do all the hard work, so you don't have to.

All completely free of charge.

If a deal has caught your eye, talk to one of our experts. They'll ask you some questions to make sure you're eligible. And if you're not, we'll find a deal that works for you.

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