What is a Seventy Five Percent Mortgage?

A 75% mortgage is a home loan where the amount borrowed is 75% of the value of the home being purchased.

The remaining 25% is provided by the person purchasing the home, in the form of a deposit.

75% mortgages are sometimes referred to as having “75 per cent LTV”. LTV stands for “loan to value” and is a financial term used to describe the ratio between the amount being borrowed and the value of the property it is being secured on.

 

Why Choose a 75% Mortgage?

There are two reasons to choose a 75% mortgage:

1. Providing a bigger deposit gets you access to better interest rates

2. Smaller mortgages mean lower interest payments

25% is considered quite a large deposit for a house purchase, and mortgage lenders will recognise this by considering you a lower risk than someone who wants to borrow say 95% of the value of their home.

Lower risk means lower interest rates, so you should enjoy lower monthly payments.

On top of that, you almost always pay more interest on debt than you earn on savings – so hanging onto all of your savings and taking a bigger mortgage does not always make sense.

 

How do I get a 75% Mortgage?

The vast majority of mortgage lenders offer 75% mortgages and these come in all shapes and sizes. Fixed rate, variable rate, discounted and trackers are all available, as are more flexible options such as offset and current account mortgages.

In fact, some of these flexible options are particularly suited to homebuyers with large deposits, due to the way they work.

What is most suitable for you depends on your circumstances – the best way to get a comprehensive view of your choices is to talk to an independent mortgage adviser, who will be able to offer you a selection of different types of mortgages and explain the advantages and disadvantages of each policy.