60% LTV mortgages (40% deposit)

60% LTV mortgages: what a 40% deposit means

A 60% Loan-to-Value (LTV) mortgage is designed for borrowers who can put down a 40% deposit. In practical terms, that means the mortgage covers 60% of the property’s purchase price (or current value for remortgages), with the remaining 40% coming from your own funds.

Because you’re borrowing less than with higher-LTV options, a 60% LTV mortgage may be a route to more competitive pricing—however, the rate you’re offered will still depend on your overall affordability and credit profile, as well as the property and mortgage features.

What is LTV?

Loan-to-Value (LTV) is the relationship between:

• the mortgage amount you want, and
• the value of the property.

It’s expressed as a percentage.

For a 60% LTV mortgage, the calculation is straightforward:

• 60% LTV = mortgage covers 60% of the property value
• 40% deposit = you provide the remaining 40%

Example

If the property is worth £300,000:

• 60% LTV mortgage amount: £180,000
• 40% deposit: £120,000

How 60% LTV mortgages work

A 60% LTV mortgage works like other residential mortgages: you agree a loan amount, choose a repayment strategy, and make monthly payments based on the interest rate and term.

The key difference is the deposit size. With a 40% deposit, you typically start with more equity in the property, which can influence how lenders assess risk.

Why lenders may price 60% LTV mortgages more competitively

With a lower LTV, the lender’s exposure is reduced if house prices fall, because:

• you’ve invested more of your own money up front, and
• the mortgage balance is smaller relative to the property value.

That said, the interest rate you’re offered will still depend on factors such as your income and outgoings, the property type, the mortgage term, the repayment method, and your credit history.

60% LTV remortgages: what to consider

A 60% LTV remortgage can be attractive if you’re aiming to:

• secure a different interest rate,
• change your mortgage term, or
• release equity (where appropriate).

However, whether you can access a 60% LTV deal depends on how your LTV is calculated at the time of application.

LTV at remortgage is based on current value

At remortgage, lenders typically consider the current value of the property. Your LTV will be determined by the new loan amount compared with that value.

For example, if your property is now worth £400,000 and you want the mortgage to be 60% LTV, the new borrowing would generally be around £240,000, leaving roughly £160,000 in equity (subject to the lender’s valuation approach).

Costs and timing can affect the outcome

Remortgaging often involves additional costs and may include:

• early repayment charges on your existing mortgage (if you’re switching before the end of a fixed period),
• valuation and legal fees,
• potential changes to your monthly payment depending on the new rate and term.

It’s also worth considering how long you plan to stay in the property, because the total cost of switching can vary depending on the product structure.

Pros and cons of a 60% LTV mortgage

Pros

• Potential for better pricing: Lower LTVs are often viewed more favourably than higher-LTV borrowing.
• Less interest overall: Borrowing less can reduce the total interest paid over the life of the mortgage.
• More equity from the start: A larger deposit can help reduce the risk of being in negative equity if property values soften.

Cons

• Higher deposit requirement: Saving for a 40% deposit can take longer than saving for smaller deposits.
• Opportunity cost of tying up funds: Using a large portion of savings can leave less cash available for emergencies, moving costs, or home improvements.

Can you get a 60% LTV mortgage with bad credit?

It depends on the lender’s criteria and the nature of the credit issues. A 60% LTV mortgage can sometimes help because the loan-to-value is lower, which may reduce perceived risk.

That said, a larger deposit does not automatically override credit problems. Lenders will still assess affordability and credit history, including factors like:

• missed payments or defaults,
• the age of any adverse credit,
• current credit commitments,
• stability of income.

If you’re working to improve your situation, it can be helpful to understand how your credit profile may affect the options available before you apply.

What types of 60% LTV mortgages are available?

Most common mortgage types can be available at 60% LTV, including:

• Repayment mortgages: You pay off both interest and capital each month.
• Interest-only mortgages: You pay only the interest each month, with the capital repayment planned for the end of the term.
• Fixed-rate mortgages: Your interest rate stays the same for an initial period.
• Variable-rate mortgages: The rate can change over time, depending on the product type.

The best option depends on your plans for the property and how you want your monthly payments to behave over time.

60% LTV mortgage FAQs

Is 60% LTV the lowest LTV available?

60% LTV is relatively low compared with many mainstream options, but it isn’t necessarily the lowest. Some borrowers may be able to access even lower LTV products, depending on lender availability and the property value.

Should you choose 60% LTV or a lower/higher LTV?

A 60% LTV mortgage can be a sensible balance if you can afford a 40% deposit without draining your savings. If you can put down more, you may be able to access lower LTV options. If you can’t, higher-LTV mortgages may be the only way to buy sooner.

The decision is usually about affordability, deposit size, and how comfortable you are with monthly payments and risk.

What deposit do you need for a 60% LTV mortgage?

A 60% LTV mortgage generally requires a 40% deposit.

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