85% LTV mortgages
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85% mortgages are a great option for most homebuyers. Get access to a range of mortgage deals if you have a 15% deposit.
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What is an 85% LTV mortgage
The loan-to-value (LTV) refers to the proportion of your house purchase made up by your mortgage home loan. So, an 85% loan-to-value mortgage means you borrow 85% of the purchase price from the lender and put down the remaining 15% yourself as a deposit.
For example, if you want to buy a property that costs £340,000, with an 85% LTV mortgage, you can borrow £289,000. You will need to provide the remaining 15% (£51,000) from your savings.
If you are remortgaging or moving home, the 15% can come from the existing equity in your property. An 85% LTV mortgage won’t offer the cheapest deals but will come with lower interest rates than higher LTV deals, like 90% LTV mortgages.
How do 85% LTV mortgages work?
To be eligible for an 85% LTV mortgage rate, you must save a deposit worth 15% of the property you’re buying. This can come from your savings, gifts from family, investments or equity in your current home.
You can then apply for an 85% LTV mortgage, which will make up the rest of the purchase price and allow you to buy the property.
If you have a repayment mortgage, you’ll repay the balance together with the interest over the mortgage term. If you have an interest-only product, you only pay the interest you have accrued each month, but you’ll then need to pay the full balance at the end of the term.
The length of your mortgage term will depend on a few things, including your age and your affordability. Most mortgages last 25 or 30 years, but some lenders won’t agree to a term that extends into your retirement.
Is 85% a good LTV?
An LTV of 85% is good if 15% is the most you can realistically contribute as a deposit.
That’s because lenders reward the security that comes with larger deposits as there’s less chance you will fall into negative equity (where the mortgage balance is more than the property's value).
Here are the pros and cons of 85% LTV mortgages:
The pros of an 85% mortgage
Lower rates: You’ll get access to more favourable rates than higher LTV mortgage deals, like 90% LTV
Faster to save: A deposit of 15% is relatively small, so it will be quicker to save than larger amounts, meaning you could buy sooner
Lots of choice: 85% LTV rates are a popular option, so you will have a wide range of providers to choose from
The cons of an 85% mortgage
Higher rates: You’ll pay a higher rate of interest compared to a lower LTV mortgage, like 75% or 60% LTV
More interest: You will pay more interest overall than if you’re able to put down a larger deposit
Money tied up: By putting down a 15% deposit, you’ll be using more of your savings than if you applied for a 90% or 95% mortgage
Putting down a hefty deposit can save you money in the long run, but remember not to commit all your savings. Try to hold some back in an emergency fund because you won’t be able to access your deposit money once you’ve bought your new home.
Can I get an 85% LTV mortgage?
To be eligible for an 85% mortgage, you’ll need a 15% deposit saved up. Once you have that, you need to find a deal that works for you and check that you meet the lender’s eligibility criteria.
Each lender will have their own criteria you will need to meet, but generally, they look at:
Your salary and any other income (e.g. investments or rental properties)
Your employment status
Your regular outgoings
Your debts, including loans and credit cards
Your general affordability - i.e. can you afford the monthly repayments
Mortgage lenders need to be confident that you can afford to repay the money they lend you. Putting down a decent deposit, like 15%, can help, and it means you hold more equity in the property, reducing the risk for them.
Our expert says…
“If you have saved a 15% deposit towards buying your new home, you’ll need an 85% LTV mortgage to complete your purchase. Mortgages at 85% LTV won’t give you the cheapest rates, but they’ll also be more affordable than higher LTV products.
“It can be tempting to save more for a larger deposit, but always remember to keep money aside for moving costs like solicitors fees and stamp duty. Speak to one of our expert mortgage brokers to find the right 85% deal for you.”
85% LTV mortgage FAQs
85% is the highest LTV available on buy-to-let mortgage products, and they are only offered by a few lenders. In the past, getting a buy-to-let mortgage with an LTV higher than 75% wasn't possible.
This is because rental properties are seen as a higher risk to lenders, so they demand a higher personal contribution.
This is what lenders will look at when deciding whether or not to lend to you for a buy-to-let property:
Your rental income: Most lenders require your rental income to be at least 125% of your monthly mortgage payment.
Salary income: You must also show your earnings separate from rental earnings. This typically needs to be at least £25,000 a year to show you can pay when you’re not receiving rent.
Credit score: The lender will perform a hard check on your credit record, and you’ll need a good credit score to be accepted.
Your age: Most buy-to-let mortgage providers have a minimum age requirement of 21 and a maximum requirement of 75.
The entry criteria for buy-to-let mortgages can be more challenging to meet compared to residential mortgages, with a higher deposit required.
85% LTV mortgage rates are a popular option, and most lenders offer them. Therefore, most types of mortgages are available at 85% LTV, including:
Fixed-rate mortgages: Having a fixed rate means your interest rate and monthly repayments will stay the same throughout the deal term. They’re available at various term lengths, including 2-year, 3-year, 5-year and 10-year fixed rates.
Variable-rate mortgages: These have a rate that can fluctuate over time, usually in response to the Bank of England base rate. The most common variable-rate products include discount mortgages and tracker mortgages.
Repayment: This refers to how you will repay your mortgage balance. With a repayment mortgage, you pay off some of the capital and interest every month so that you will have cleared your loan by the end of the mortgage.
Interest-only: With interest-only mortgages, you only pay off the interest you accrue on the amount you borrow. This means you will still owe the balance of your home loan at the end of the term.
Loan-to-Value (LTV) is the ratio of your mortgage to the value of the property you’re buying. It is expressed as a percentage and is an assessment of lending risk that mortgage providers look at before agreeing to a mortgage.
For example, if the house you want to buy has a purchase price of £300,000, you would need a loan of £255,000 to get an LTV of 85%. The remaining 15% (£45,000) would be what you’d need to provide as a deposit.
It depends on your financial situation, but putting down a larger deposit to get a lower LTV can save you money. Some of the advantages of having a low LTV include:
Getting access to lower interest rates
Paying less interest on your mortgage overall
More security because you’re less likely to fall into negative equity
By having a smaller mortgage, you could pay it off sooner
However, saving up for a larger deposit could delay getting onto the property ladder. With the cost of renting rising, taking the plunge and buying a property as soon as possible makes sense, but only when you can comfortably afford it.
Remember to factor in home-buying costs like stamp duty, solicitors fees and moving expenses when working out the size of your deposit. It’s also always worth trying to hold some savings back in an emergency fund so you can access it if you need it.
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Important info & marketing claims
You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
*The savings figure of £420 is based on Better.co.uk remortgage customers in October 2023. Read more on our marketing claims page.
We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.
Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.
Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.
As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.
For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.