85 mortgages will likely refer to mortgages with a loan to value of 85%. These mortgages are very common today but whether you can get a mortgage offer for an 85 LTV mortgage will depend heavily on your mortgage deposit, the property value, your credit score and the mortgage lenders eligibility criteria.
How will a mortgage lender assess you for an 85 mortgage
To get an 85% LTV mortgage, the mortgage lender will first want to see that you have a mortgage deposit of 15%.
Example on a £100,000 home you will need £15,000 for an 85 mortgage.
Once the mortgage lender is satisfied you have the mortgage deposit they will then perform a soft credit check on your credit profile to give you an agreement in principle.
This is an indication that they are willing to lend to you on an 85% LTV mortgage but this agreement in principle could very well be declined after your property valuation which is the next step.
Mortgage lenders have it within their rights to withdraw a mortgage offer at any time before completion.
This means if they find anything wrong with your 85 mortgage application then they could withdraw the mortgage offer.
The mortgage lender will usually perform a property survey at your cost and then analyse your financial information to be sure you make the necessary income to qualify for the mortgage.
If everything looks fine then the mortgage lender will produce a mortgage offer for your 85% Loan To Value mortgage.
Alternatives to 85 mortgages
If you can’t save up the 15% mortgage deposit needed to make you eligible for an 85% LTV mortgage then you may be able to access a range of 100% LTV mortgages.
They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or thebpost office family link mortgage.
How to get 85 mortgages
You can access a range of 85% LTV mortgages if you have a 15% mortgage deposit but that might be too much for you to save.
But don’t be too worried, the governments here to help you with its home buying government schemes which can either reduce the total price of your home purchase or offer you money or an equity loan towards your mortgage deposit.
The government schemes you can use for an 85% LTV mortgage include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich the local councils provide the Norwich home options scheme.
Where to get an 85 mortgage
To get an 85% LTV mortgage you can either go directly to a mortgage lender or to a mortgage broker.
If you are considering getting a mortgage for 85% LTV then using a mortgage broker may be a good choice as mortgage brokers usually have access to many more products than any specific mortgage lender.
Mortgage brokers will also usually have access to specific deals from mortgage lenders as well as experience on which mortgage lenders will be more likely to accept your case. This will help you avoid getting rejected on a mortgage application and having to build credit due to the damage a rejection might do to your credit score.
If you have bad credit or are self-employed then specialist mortgage brokers such as bad credit mortgage brokers or self-employed mortgage brokers may be useful.
If you need financial advice and you live in the UK then you could 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.