Loan to Value - Frequently Asked Mortgage Questions

Hi guys, Dan and Kye here from Crescent Mortgages again coming to you with some of our FAMQ's, frequently asked mortgage questions. Today's topic is loan to value loan. Before we get started, as always, if you could like the video and subscribe to the channel it would be very very welcome, as the channel is a baby. If you have any questions there should be a banner popping up on the screen, with our... is it is it a link? No, it's not. We do not qualify for that yet at this point of filming as we don't have a thousand subscribers so we can't be clickable. It's in the bio and the details are on the banner, wherever it is, that'll take you through to the website and then you can send us a message we'll get back to you we'll have a chat and go from there.

So I think this is the fourth attempt of filming this video, I think the first attempt was actually the first the first FAMQ we did and we thought it was quite good but we watched it back and actually we were quite excitable weren't we? Yeah, we were a bit too jokey. We're finance people, we have to calm down, so hopefully fifth time's a charm. Oh this would be good now. So let's let's try one more time. Kye, what is loan to value? No, I'll go. Right, so loan to value is your mortgage as a percentage of your property value so a simple example if your property is worth £100,000 not when you originally bought it but the value today and your mortgage is £90,000 then your loan to value will be... 90% very good and again if your property is worth £100,000 and your mortgage is £56 000. It's a hard one, then your loan to value is... 56%. So hopefully that's kind of an example which really explains kind of how it works if your property is worth £200,000 and your mortgage is £100,000 your loan to value is 50% and so on. What about £68,000 value and a £51,000 mortgage. Oh my goodness, do you know that?
75%. 
Oh yeah, god, you've really made me look stupid in front of our six subscribers. Including us. Right so that's what learns the value is, how does it impact people? So loan to value you want it to be lower so 50% is better than 60% for example, the lower loans value the better and you get better products generally the lower your loan to value is. The example I just gave isn't the best because 60% is the best threshold. Anything below that level you don't really generally benefit from.
So your loan to value can be lower than 60% as we've mentioned ,you know property of £100,000 mortgage of £30,000 your loans value will be 30%, but you'll find that anything under 60% you will be eligible for generally the best interest rates. Occasionally a lender comes in and gives slightly better rates of 50% loans of value, but 99% of the time, under 60% you'll be eligible for the best rates and they come down in five percent increments generally. Yeah, so the highest loan to value would generally be 95%, which means if you're buying you just have to put down a five percent deposit but not every lender does that, a lot of them requiring at least a 10% deposit, but for every 5% on top you'll start to look at better better interest rates. Not just better interest rates actually, no, that's the main one for a lot of people but the criteria loosens doesn't it? So you will find lenders may be more generous with how much they lend or if you've got some other criteria issues they'll be more lenient on those and the better the phone's value the easier it gets for everyone. Better for everyone and the credit check at high loans to values is quite strict as well so if your loan to value is 90% to 95% then the credit check can actually be quite strict but the lower it goes the more lenient that will become as well. How can we impact it? I mean the two main times, I mean if you look the two times you'll remortgage will either be a purchase or a remortgage, so if you're purchasing really the main thing you can do to determine your loan to value is put down a bigger deposit now of course you know if you don't have the money that's not possible but if you put down a bigger deposit that will improve your loan to value which will then improve your interest rates and possibly the criteria that you get. If you're remortgaging, what can someone do when they're remortgaging? Well, obviously if you can improve the value of your home, which is easier said than done, but if you're about to do renovations just after you remortgage perhaps maybe bring them forward, if you can. That could have a benefit again, not always possible, but if it you know if you do the renovations first the value the property should go up which helps, but the main one is probably just paying a bit off if you're on a threshold. Can you give them an example? Yeah I'm going to give them an example, I'm going to use round figures. So again if we said you had a mortgage of £61,000 pounds on a property of a £100,000 your loan to value is currently? Sorry i switched off!
Was it £61,000? 61%. There we go. 
It may be that if you pay a £1,000 off to get to 60% loan to value you have a better set of products available and we or any broker really should be able, especially us, mainly us, should be able to tell you if it's worthwhile paying off a £1,000 to save, whatever the interest rate or payments are. But there's certainly a conversation that your broker should bring up, but feel free to bring up yourself just in case your broker's incompetent. Yeah which hopefully they're not. 
I forgot to mention you know if you don't if you don't have the money in your account to pay off the £1,000 or however much to get you to the lower loan to value it's not the end of the world but if the money just sat there, you know if you've got savings that aren't being used, and £1,000 or £2,000 or however much improves your loans to value and therefore your interest rate then again it's a conversation you can have with your broker to decide if that's the the right way to to spend your money and spend your savings.
I think we've got through that one all right. 
That felt better yeah, I enjoyed that one actually. Like and subscribe... as always like the video subscribe to the channel and you can hit the link in the bio, maybe, we don't know whether it's going to be but if you hit it, it will take you to the website you can drop us a message and then we'll come back to you and we can have a chat about about your mortgage and answer all of your questions! As always we are fee-free have a great day!