Have for you trying to get a mortgage well here’s how it works people you’ve seen my videos before when other graphics our particular Forte of mine so there’s a house all right let’s say that the value of the house on the open market is , pounds all right and you plan to put down a , pound deposit lucky you and that means you need a thousand pound alone or mortgage all right now how do I know you put down a xxx half and deposit well maybe you can’t afford.
pound deposit the deposit is down to what you can manage to scrimp and save together okay persuade parents or friends to give you whatever happens to be so you’ve got a deposit from somewhere all right and the rest is the mortgage so a combination of what’s called equity that’s your bit and a loan from bank secured on the property makes up the funding for the hundred thousand pound property all right now here the LTV as you’ll sometimes see it quoting.
The press put a jargon there the loan to value ratio is simply that compared to that as a percentage all right so here the LTV , as a proportion of the value of the property literally our loan to value ratio is % all right and in simple terms basically the higher that is the harder it is to get the loan all right now back in the ridiculous days pre-financial crisis there are banks around that would say no problem you can have LTVs of more than one hundred percent one hundred and twenty five percent you can actually borrow more or than the value of the property from a bank.
I’d even give you hints and tips as to what to do with the extra alright so on a hundred thousand pound property this may sound a little mad but it was happening you could borrow one hundred and twenty five thousand pounds I’m not kidding your bank website saying things like well book yourself a holiday buy a car with the extra now that is madness.
I’ve got a lot of people into big trouble which is why LTVs tend to be a lot lower Nell okay because of something called negative equity she’s the third bit of jargon I’ll cover just now but here’s my take away ok the higher the loan-to-value ratio naturally the higher the interest rate and the heart of the mortgage will be to come across so if you can scrimp together as much of the deposit as you can get hold of bring down the loan-to-value ratio but tend to find that better deals and become.