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Loan to value/deposits -
The Loan to Value or LTV as it is also known, is the amount to be lent against the value of the property i.e. on a property worth £100,000 the LTV on a loan of £85,000 would be 85%.
The LTV’s are based on purchase price or valuation whichever is lower.
Loan To Values can affect both the amount that is lent and the rate payable and differ for each lender. Some lenders will offer better products to clients that have a lower LTV as the risk is perceived to be lower.
Additionally each lender has a banding range which states the maximum amount they will lend depending upon the loan to value. Again each lender is different and they may have more than one banding e.g. 1 for full status, 1 for Self Cert, 1 for First Time Buyers etc. It is all based on risk and the higher the perceived risk, the less they will lend.
Typical Example
Up to 95% LTV- Max loan £250,000
Between 85% and 95%- Max Loan £350,000
Between 75% and 85% - Max loan £500,000
Up to 75% - £1,000,000
Any loan above £1,000,000 is by referral
Deposits would be the remaining percentage i.e. an 85% loan would require a 15% deposit.
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