85% LTV Mortgages

A mortgage with a loan-to-value (LTV) ratio of 85% is standard in the UK residential market, but what is an 85% LTV mortgage, how do you get the best deal on one, and which lenders offer them? Read on to find out.

What is an 85% LTV mortgage?

An 85% LTV mortgage is a mortgage with a loan-to-value ratio of 85%. This would mean that the borrower is putting down 15% deposit and borrowing 85% of the property’s value.

In the UK residential market, 85% LTV is considered average, which means the rates are slightly better than they are for 90-95% LTV deals, but may be higher than at 80% or less.

With a 15% deposit to pay upfront, you will exceed the minimum deposit requirements at the vast majority of UK mortgage lenders, but specialist products such as buy-to-let, commercial and interest-only mortgages can come with lower LTV (higher deposit) requirements.

What interest rate to expect with 85% LTV

At the time of writing (June 2024), interest rates on 85% LTV residential mortgages start at under 4.5%, with fixed-rate deals with longer introductory rates periods among the cheapest. Tracker rate mortgages have some of the highest initial rates right now.

You will have plenty of mortgage options if your loan-to-value ratio is 85% and you are buying a residential property. You can browse through the rates and deals available for borrowers with 15% deposit for free on Teito and choose the one you want in real time.

When choosing a mortgage online with us, you will have the option to speak to a whole-of-market mortgage broker, who can provide bespoke advice, help you with your selection and make sure the application process goes smoothly from start to finish. Choose an option below to get started:

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Can you get an 85% LTV buy-to-let mortgage?

It is difficult to be approved for a buy-to-let mortgage with an 85% LTV as deposit requirements in this corner of the market are typically higher. The maximum LTV that most buy-to-let mortgage lenders are willing to stretch to is 75-80% (or 20-25% deposit).

If you have 15% deposit saved, there could be options that will help you buy an investment property sooner. See our guide to low deposit buy-to-let mortgages for more information.

Getting approved with bad credit

It is possible to get a bad credit mortgage with a loan-to-value ratio of 85%. Most mortgage lenders, including specialist ones, will ask for at least 15% deposit when the borrower has adverse, so this amount should cover you for minor-to-moderate credit issues.

For more severe credit issues, such as IVAs, bankruptcies and repossessions, more deposit is typically needed, especially if these problems have not been discharged.

You can expect to pay a higher interest rate on an 85% LTV mortgage if you have bad credit, but more favourable rates might be available if you are in a position to save up extra.

Your chances of mortgage approval will increase if:

• Your bad credit is more than 3-6 years old
• You have a reasonable explanation for it (e.g. an unexpected life event)
• Your financial conduct has been responsible since the issue occurred
• You download your credit reports to have errors corrected

Can you get an interest-only mortgage with this deposit amount?

The maximum LTV for a residential interest-only mortgage is usually 75% so you would need an additional 10% deposit to get approved for this repayment type at most lenders.

There may, however, be some fallback options you could explore. There are specialist mortgage providers who usually consider lending under similar circumstances (at an LTV ratio of 85% or higher) if any portion of the mortgage is capital repayment.

Part-and-part mortgages are available for borrowers who want the best of both worlds, allowing them to take out a hybrid mortgage with interest-only and capital repayment parts.

You can read more about these mortgages in our part-and-part mortgages guide.

Second home mortgages

Deposit requirements for second homes (for residential purposes) generally start at 10%, so you should have a number of options if your loan-to-value ratio is 85%.

One option that homeowners consider when planning to purchase another property is to remortgage their primary residence to release equity to fund the deposit. To refinance for this purpose, you will need a loan-to-value ratio of 75-85% on your main home.

Commercial mortgages

Commercial mortgages are difficult to come by at 85% LTV as deposit requirements tend to sit in the 20-40% range. However, this sector is unregulated which means lenders have the flexibility to relax their criteria if they believe the borrower’s investment is strong.

Your chances of securing a low deposit commercial mortgage will improve if you:

• Have experience in the industry your investment relates to
• Can present a strong business plan
• Have other properties that could serve as security
• Use a mortgage broker to access specialist lenders

Calculate the repayments on an 85% LTV mortgage

To work out how much your 85% LTV mortgage will cost each month and overall, first deduct your 15% deposit from the property’s purchase price. Next, take this figure and enter it into the calculator below along with a term length and interest rate to receive some quick results.

Why choose Teito for your mortgage needs?

You can compare rates and deals on 85% LTV mortgages for free on Teito and access support from a whole-of-market broker, if you need a little help.

Here are just some of the reasons why you should choose Teito for your mortgage:

• You can access rates from 90+ lenders in seconds
• Our brokers have access to exclusive 85% LTV deals
• We are 5-star rated on leading review websites
• You can secure an agreement in principle in minutes

Read to compare rates and deals and take advantage of a free, no-obligation chat with a broker who specialises in 85% LTV mortgages? Get started here.