50% LTV mortgage (A complete guide)

In this brief guide, we are going to discuss 50% LTV mortgages, how to get a 50% LTV mortgage and what to be aware of.

What is a 50% LTV mortgage?

A 50% LTV mortgage is a mortgage where the mortgage lender hs only provided 50% of the mortgage based on the value of the home.  A 50% LTV mortgage means you will need to put down a mortgage deposit of 50%.

With a 50% Loan to value mortgage, you are essentially looking to borrow only half of the property’s value.

You may also have an existing mortgage an own 50% of the equity in your home.

A 50% LTV mortgage will likely mean you have a very good mortgage rate due to the fact that the mortgage lender will have much less risk on a mortgage in comparison to a 90% LTV mortgage.

This is the case if you already own the home, you will have a lot of competitive mortgage offers if your credit score is good and this will allow you to find the best remortgage deal.

Are you eligible for a 50% LTV mortgage?

• To be eligible for the 50% LTV mortgage you will usually need to either have a 50% mortgage deposit or at least 50% of the equity n a mortgaged property.

• You may also likely need to have a good credit score

• You will need to have the right to live and reside in the UK

• You will need to be at least 18 years of age

• You will still need to pass the mortgage lenders affordability check

How do you repay a 50% LTV mortgage?

You can repay a 50% LTV mortgage by either taking out a capital repayment mortgage or an interest-only mortgage.

By using a capital repayment mortgage, you will increase the equity you own in your property but by using an interest-only mortgage you will not increase your equity in the property and you will still have to repay any capital borrowed at the end of the mortgage using the capital repayment vehicle the mortgage lender approved.

When taking out a 50% LTV mortgage you will also have an option on which type of interest you intend to use.

You could use a fixed-rate mortgage, a tracker rate mortgage, a standard variable rate mortgage, a discount rate mortgage, a capped rate mortgage or a cashback mortgage.

What are the advantages of a 50% LTV mortgage?

• The main advantage of a 50% LTV mortgage is that it increases the likelihood of you getting a better mortgage rate as the risk to the mortgage lender is much lower than it would be with a higher LTV mortgage.
• A 50% LTV mortgage will also increase the number of repayment options you will have on your mortgage. You can repay using an interest-only mortgage, a tracker rate mortgage, a fixed-rate mortgage etc

Use a mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a mortgage on your new home.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.

This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.

FAQs: 50 LTV mortgage

In this brief guide, we discussed 50% LTV mortgages, how to get a 50% LTV mortgage and what to be aware of.

If you have any questions or comments please let us know.

If you are in need of advice about your money and you live in the UK then you may contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.