What are the pros and cons of 90% LTV mortgages?
- Saving a 10% deposit may be manageable, even for first-time buyers
- Putting down a smaller deposit can let you keep money aside for property renovations and other projects
- You get better deals and rates with a 90% LTV mortgage compared to a 95% mortgage
- You're less likely to go into negative equity (when you owe more than your property is worth) compared to a 95% deal
- Those with larger deposits can get lower LTV mortgages and normally better rates
- You're more likely to go into negative equity compared to a lower LTV deal
- If a 10% deposit stretches your budget, a 95% mortgage may allow you to keep some money back for emergencies
Need more help?
Are there alternatives to 90% LTV mortgages?
The alternatives to a 90% mortgage are the other LTV deals lenders offer. Some of the most common are:
- 95% LTV mortgages
- 85% LTV mortgages
- 80% LTV mortgages
- 75% LTV mortgages
- 60% LTV mortgages
You can also get 100% (no deposit) mortgages, but these are rare. In most cases you require the assistance of a guarantor or the savings of a family member to be eligible.
What types of 90% LTV mortgages are there?
The 2 main types of mortgage are fixed-rate and variable-rate.
A fixed-rate mortgage means your interest rate remains the same for a set period. This gives you peace of mind that your payments won't suddenly increase if interest rates rise. But you also won't benefit from lower payments if interest rates fall.
A variable-rate mortgage means your interest rate is subject to change during your deal period. If the rate increases, you end up paying more each month. But if it decreases, you benefit from lower payments.
The main types of variable-rate deals are discount mortgages and tracker mortgages.
What costs are involved with 90% LTV mortgages?
The main costs involved with a 90% LTV mortgage are:
- Deposit - 10% of the property value
- Monthly repayments - based on the loan amount (90% of the property value), interest rate and term length
- Fees - there are various fees associated with a mortgage, including the arrangement fee (set-up cost)
Can I get a mortgage with less than 10% deposit?
Yes, a number of lenders offer mortgages with a 5% deposit. But there are less 95% mortgages on the market than 90% deals. The rates available with 95% deals are also normally higher.
You can also get 100% mortgages in some rare cases, but you'll normally require the assistance of a guarantor or family member due to the risks involved with these deals.
Learn about different mortgage types
Mortgages
are a type of loan used to buy a property. The mortgage is secured against the value of the property.
Interest-only mortgages
are where you only pay back the interest each month. When your mortgage term comes to an end, you still owe exactly what you borrowed at the start.
Buy-to-let Mortgages
aren't that different from a regular mortgage. But there are some important differences.
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Page last reviewed: 26 September 2023
Reviewed by: Claire Flynn
YOU SHOULD THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME/PROPERTY. YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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