Interest rates on Mortgages

Iwantahouse_2

Do the interest rates go down the more money you borrow? If so does anyone know what the thresholds for the different rates are?

tonydee

In a word no.

tonydee

Thats no the rates don't decrease if you borrow more.

Iwantahouse_2

are they the same if you borrow less?

lisyloo

are they the same if you borrow less?

Rates are the same whatever AMOUNT you borrow.
However one thing that does affect the rate is the LTV (loan to value).
For exmaple if you want to borrow 80K and the house is worth 100K then your LTV is 80%.

In general you will get better rates with a lower LTV.
The point at which is changes varies across lenders but often 75% and 95% are figures that come up.
The reason why is lower is that it's less risk for the lender, for example if you default and they have to repossess then on 95% there is a chance they won't recover their money but at 75% the risk is a lot lower.

If you can explain your circumstances then people might be able to help further.

Joe_Bloggs

Loan to value of the property is a key factor. Borrow 100% or more then expect to pay a higher interest rate or added extra charges (HLC). The breaks tend to be every 5%. So 95%, 90% etc up to 75% can get a better rate with more flexible features. There is no one rule for the numerous lenders, only a general trend.
J_B.

grade15

well..look at halifax rates..website

MortgageMamma

No it doesnt work like that

Rates move up and down in line with market conditions. Fixed rate mortgages stay the same for a set period of time.

Rates are influenced by how much you want to borrow as opposed to the property valuation (i.e. 100k loan for 100k property would be 100% loan to value, 80K loan for a 100k property would be 80% loan to value) and so on, your credit score (good bad or very bad etc), your employment status, (if yu can prove your income or not), and the type of mortgage you want and over what term, for example, a 2 year fixed rate will normally cost more than a 10 yer fixed rate.

Are you asking this questoin as you feel like you are paying too much for your mortgage?

regularsaver1

grade15 is right in one way
Halifax have bought in new thresholds - eg below £30k, £30k - £75k, £75k- £125k and so on - the rates differ depending on the balance and type pf product - so yes in effect

originally they did this on loan to value

TangentMan

It isn't quite as simple as people are making out.

Some lenders will offer you a better rate for the more money you borrow. But this tends to be in bands of >£500k, >£1m and so on. If you want to borrow over about £2m you should get your financial people to negotiate a special rate through their relationship with the banks!

Also, the more money you borrow the lower the Loan to Value rate that the banks will stipulate. So, if you are borrowing, say, over £500k then they may offer you a lower rate but stipulate that you have say a maximum of 75% LTV.

Sub £500k, it is as others have said, largely LTV based. So really the amount you are borrowing is not specifically coming in to play.

Joe_Bloggs

The Halifax have a tracker mortgage product in which the rate tracks to the end of the term. Many would call this a lifetime tracker. The rates are 5.99% for less than £30k, 5.39-5.49% for £30K-£75K, 5.29-5.39% for £75K-£125K, 5.19-5.29% for £125K-£250K and 5.09-5.19% for £250K plus. Paying a fee gets you the lower rate.
It is pretty poor value for the lower amounts borrowed given the likely loan to value advantage they would have with other lenders. There are lifetime tracker offsets cheaper than all these rates.
J_B.