An 85% LTV mortgage is where your deposit is worth 15% of a property's value and a lender loans you the other 85%. LTV stands for loan-to-value. If you're remortgaging, the 15% is the equity you already have in your home.
On a home worth £240,000, you'd need a £36,000 deposit. Your loan from the bank or building society would be £204,000. You'd repay that over time with interest on top.
Most lenders go up to 95% LTV, so buyers can get on the ladder with a 5% deposit. But the higher your LTV, the more your mortgage tends to cost. If you're not sure how the ratio works, our guide to what LTV means breaks it down.
You need 15% of the property price. The table shows what that looks like at different prices.
| Property price | Deposit (15%) | Mortgage (85%) |
|---|---|---|
| £150,000 | £22,500 | £127,500 |
| £200,000 | £30,000 | £170,000 |
| £250,000 | £37,500 | £212,500 |
| £300,000 | £45,000 | £255,000 |
| £350,000 | £52,500 | £297,500 |
Your deposit can come from savings, investments, a gift from family or equity in your current home. A bigger deposit means a lower LTV, which can open up cheaper deals.
To secure an 85% mortgage, you’ll first need to save a deposit. This could be funded from savings, investments, gifts from family or equity in your current home.
Next, you’ll need to find a lender who is willing to offer you the remaining 85% as a loan. This means meeting the lender's affordability criteria and demonstrating your earnings are high enough to make the repayments.
Once your mortgage has been agreed, you’ll have to repay the amount borrowed in monthly instalments with interest added on top.
Lenders use your loan-to-value (LTV) ratio as a factor when deciding what interest rate to offer you. The lower the LTV ratio, the better the mortgage rates are generally.
Someone with an 85% LTV mortgage will usually have a better deal than someone with a 95% LTV but will pay more interest than if they’d gone for a 75% LTV mortgage. That’s why it makes sense to have as big a deposit as possible when buying a home.
It can be, if 15% is the most deposit you can realistically put down. An 85% LTV mortgage gives you access to more deals and usually cheaper rates than 90% or 95% LTV, without needing the larger deposit that lower LTVs demand.
Whether it's the best choice for you depends on your budget and your plans. If you could wait and save for a bigger deposit, you may move into a lower LTV band with cheaper rates. If waiting means paying rent or missing the right home, 85% LTV may be worth it.
Yes, if you have a 15% deposit and meet the lender's criteria. Plenty of first-time buyers use 85% LTV mortgages. Our first-time buyer mortgages page covers the wider options, including lower-deposit deals.
Remember stamp duty. First-time buyers in England and Northern Ireland can claim relief on homes up to a set price, but it only applies if every buyer is a first-time buyer.
Yes. If your home has at least 15% equity, you can remortgage at 85% LTV. Equity is the part of your home's value you own outright. As your balance falls or your home's value rises, your LTV drops, which can unlock better rates when your deal ends.
Lenders set their own criteria, so they'll look at your individual circumstances. Common things they consider include:
Your salary
Other income, such as buy-to-let property or investments
Savings
Regular monthly outgoings
Debts, such as loans and credit cards
Your credit rating and any past debt issues
The type of property and its value
Getting a mortgage in principle first shows you roughly how much a lender might loan you before you apply.
Possibly. Some lenders will consider applicants with a poor credit history, but you'll usually have fewer deals to choose from and may pay more. Putting down a 15% deposit can help, because a bigger deposit means less risk for the lender.
Checking your credit report before you apply lets you fix errors and see what lenders will see. A broker can also tell you which lenders suit your situation.
Your deposit isn't the only upfront cost. Budget for:
Product or arrangement fees, which some lenders charge
Valuation and survey fees
Legal and conveyancing fees
Stamp duty, if you're buying above the threshold for your situation
Some deals charge no product fee but come with a higher interest rate, so look at the total cost, not just the headline rate. Our guide on how much it costs to buy a home covers the full list.
Fixed-rate mortgages is when the interest rate you pay is guaranteed for a set period – typically two, three, five or 10 years.
Your monthly repayments stay exactly the same for the length of the deal. You might pay more at the outset, but you get security in return and know what your repayments will cost you. That means you’re not at the mercy of external factors like interest rate rises.
A variable-rate mortgage can rise or fall during your deal. How it changes depends on the type:
A tracker mortgage follows an external rate, usually the Bank of England base rate.
A lender's standard variable rate (SVR) is what you move onto when your deal ends. The lender sets it and can change it, and it's usually the most expensive option.
A discounted mortgage sits a set amount below the lender's SVR for the length of the deal
Fixed-rate mortgages is when the interest rate you pay is guaranteed for a set period – typically two, three, five or 10 years.
Your monthly repayments stay exactly the same for the length of the deal. You might pay more at the outset, but you get security in return and know what your repayments will cost you. That means you’re not at the mercy of external factors like interest rate rises.
A variable-rate mortgage can rise or fall during your deal. How it changes depends on the type:
A tracker mortgage follows an external rate, usually the Bank of England base rate.
A lender's standard variable rate (SVR) is what you move onto when your deal ends. The lender sets it and can change it, and it's usually the most expensive option.
A discounted mortgage sits a set amount below the lender's SVR for the length of the deal
No. You need a deposit of at least 15% of the property price. If you have little or no savings, read how to get a mortgage with no deposit.
Usually, yes. Lenders tend to keep their best rates for borrowers who need a lower LTV. Comparing as many lenders as you can helps you find the best mortgage rates on offer.
You need 15% of the property's value. For a £250,000 home, that's £37,500.
Not usually. A 15% deposit makes you look less risky to lenders than a 5% deposit, so more lenders may say yes. You'll still need to pass affordability checks.
It's unlikely. Buy-to-let lenders usually ask for bigger deposits than residential lenders, though a few specialist lenders may consider experienced landlords.
At 90% LTV you borrow more and put down a 10% deposit. Rates are usually higher than at 85% LTV. Our 90% LTV mortgages page covers that option.
Use the links below to find out about other mortgages
