How a low LTV can improve your mortgage options

The loan to value, known as LTV, part of your homeowner loan, mortgage or remortgage is something it is useful to understand and you can work out both what level LTV you are at now and what your LTV would be at after taking out a loan or mortgage, by using the First Choice Finance LTV calculator.

The loan to value figure if often used to describe the portion of the price you`ll be able to borrow on a certain loan or mortgage plan when you`re looking to purchase a house, remortgage your home or take out a homeowner loan.

For example if you`re buying a £100,000 house and you have a deposit of £10,000, you`ll need a £90,000 mortgage to pay for the rest, so that`d have an LTV of 90%. We will explain more on the calculation shortly.

Now, you don`t just have to use the LTV calculator when you`re buying a property - you can use it when you`re looking to remortgage or get a secured loan too.

According to the Bank of England Credit Conditions Survey, the availability for this type of borrowing increased in the second half of last year, so you could achieve a better rate now, although as we all know rates can go up as well as down.

For your current loan to value position, the LTV calculator takes your existing mortgage balance, divides it by the property`s value and multiplies it by 100 to give you a percentage figure.

When you`re taking out a homeowner loan or a remortgage to raise extra money, the process is similar, although the amount you want to borrow needs to be added to your existing mortgage balance.

This will then give you the proposed LTV after you borrow the money.

The general rule of thumb with Loan to value percentages is the lower the number, the more choice you will have, however saying that there are schemes and plans that come and go that have loan to values of 90 or even 95%.

To find our best loan to value ratio product for your property and to try out the LTV calculator, visit firstchoicefinance.co.uk or to talk to our team, call 0800 298 3000, from a landline, or ring from a mobile on 0333 003 1505, which will normally be included in your mobile phone plan.

Mechanics Of Loan To Value

The key to grasping LTV is to work with actual figures. The fact that a house was on the market for £200,000 but you bought it for 180,000 shows a great deal, but bear in mind for your loan to value calculation the sold price (or the actual `if sold` value when remortgaging property) is the figure that you need to use in the ltv ratio calculation. The other figure is the amount of mortgage secured on the house or flat. This will need to include any lender, product or intermediary fees that you chose to add to the mortgage when you took it out. Try out our loan to value calculator to get a feel for how loan amounts effect the ltv figure on your property. So if we go with the same example if you had taken out a £140,000 mortgage to buy the property but the add on costs came to a further £3000 which was added to the mortgage, the figure to use in our ltv calculator would be 143,000, i.e. the total amount of the loan secured on the value of the property.

Homeowner Secured Loans 9.8% APRC. Representative example: Borrow £50,000 over 180 months. 60 months at 8.1%, £497.83 pcm fixed at 60% LTV. Then 120 months at 10.1%, £539.89 pcm variable. Total payable £94,656.60. Total cost of credit £44,656.60 (including: £795 lender fee, £985 broker fee & £42,876.60 interest). First Choice are tied to certain loan providers.

Mortgages & Remortgages 8.4% APRC. Representative Example: Borrow £120,000 over 25 years at 5.99%, £778.86 pcm fixed for 3 years at 60% LTV. Then at 8.75%, £974.86 pcm, variable for 22 years. Total payable £286,416. Total cost of credit £166,416 (including: £985 broker fee, £999 lender fee & £164,432 interest)

Unsecured Personal Loans REPRESENTATIVE 49.9% APR (VARIABLE) First Choice are tied to certain unsecured lenders.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Security is required on immovable property.

Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk

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