LTVs

will-he-payitoff

My son FTB is buying a property this spring. I have been looking for a mortgage for him and cannot work out what percentage LTV reduces the interest rates. Is there a set figure or is it a case of keep putting numbers in a mortgage calculator? TIA

Strummer22

It depends on the lender. Have you spoken to a broker who can help with your son's specific circumstances?

ACG

They will generally creep down marginally at each banding. 
But you could find that there is an overlap.

For example,
Lender A might be:
5% at 90% LTV, 4.95% at 85% and 4.9% at 80%. 

Lender B might be:
4.99% at 90% LTV, 4.96% at 85% and 4.89% at 80%. 

You might have one lender slightly cheaper at some brackets and slightly more expensive at others. Then you also need to take account of the lenders arrangement fee. As a general rule of thumb, it is usually cheaper to pay the fee (or add it tot he mortgage) in order to secure a lower rate on larger mortgages and/or where you are tying in for 5 years. But there is no definitive you just have to check the figures. 

In terms of the drops in rates, there is usually the biggest drop when you go from 95% down to 90%, 90% down to 85% and then below 75%. 

Im not trying to make our job sound like brain surgery, it isnt - although there are times it can be. But why not use a broker? They will help you find the better deals but they are also on hand for the million and one questions/problems that can crop up. 

fergie_

No harm in doing your home work first, but definitely useful to utilise a broker in the current climate.

A fee free deal can work out cheaper if the borrowing is relatively small - just need to factor the fees and interest into the calculation over the 'deal' period.

will-he-payitoff

He is only looking at a 85-95 k mortgage so thought the brokers fees would be more than its worth

ACG

Im not trying to convince you/your son to spend money, but having a broker on hand can be worth the money (I know, I know I am biased). 

What happens if you get a down valuation? What do you do? Speak to the agent? The agent works for the seller. 
What happens if something crops up in the legal work? Some solicitors are helpful, some less so. 
What happens if there is a problem with the application? Call up a call centre, sit on hold 50/50 on whether the person in the call centre is helpful. 

Its not a case of just finding the cheapest rate. Do you fit criteria, does the property fit, how long will it take them to look at your application... 

If everything is straight forward, there is a good chance everything will fly through without touching the sides. But there is also an endless list of things that can go wrong. There is a website for mortgage brokers, you should see some of the threads on there about silly underwriter requests... In fact there are a few threads on there slating underwriters. 

I promise this is not aimed at putting the fear into you. Its just to sort of make you think beyond the rate and the value a broker can add, you do not need a broker to find the cheapest product - any idiot can do that (I am not calling you an idiot btw). I have had a call this morning with a client. He doesnt want to move, he just wanted to pick my brains... Existing customer to me is a customer. I will help him forever more even if we never do another mortgage for him.