Lenders are working hard for buyers’ attention these days, and the place with the most heat at the moment is the higher-LTV bracket.
LTV is the loan-to-value percentage, so the higher the number, the more of the property’s value is borrowed instead of paid for up front. Lenders are looking to win more business in 80-90% area by cutting their interest rates.
In the higher-LTV market, even small rate changes add up quickly. So, let’s translate the percentages into a hypothetical mortgage. We’ll reach for a mortgage repayment calculator (and pretend that the interest rate will stay the same for the whole life of the mortgage term of 25 years), and plug in:
- loan amount: £185,000
- Interest rate: 5.09%
The initial monthly repayments will be £1,091, and in total, we’d pay £327,364.
If we nudge that rate down by .5%, we’d save £53 each month. Overall, we’d end up saving £16,035. Yes, £16 grand. It’s the most important market in which to shop around, and to find the right deal.