So you’re starting out on your journey towards buying a home in Cirencester. You know you need a mortgage but you keep hearing various snippets of mortgage jargon and, just when you think you’ve got your head around it all, your broker says something that makes you go ‘eh?’
That’s where we come in. We’re making it our mission to take all the mystery out of the mortgage application process by explaining each step in plain old English (we would explain in other languages too but I’m afraid we’re not that clever!)
A good place to start is ‘Loan to Value’
This is a term that will roll off the tongue of your lender or mortgage advisor and you may well be left wondering what on earth they are talking about! (Remember, in the Hudson Rose office, no question is a stupid question. It’s vital that your advisor explains everything to you so that you have full understanding of what you are committing to!)
So what does ‘Loan to Value'(LTV) actually mean?
In a nutshell, the Loan to Value is the percentage of the value of the property that the lender is going to lend.
Say what?
First things first, you need to know the value (as accurate as poss) of the property you are hoping to buy. This may be the price that it has been listed as or it may be slightly less or more depending on the buoyancy of the market at the time.
Now think about how much you might be able to put forward as your deposit. This is usually a cash sum that you have saved up over time or that a very kind relative has gifted to you. Now calculate the difference between the full value and your deposit as a percentage.
OK let’s use an example. Say you want to buy a house in Cirencester that is on the market for £100,000. You have a deposit of £10,000 so 10% of the value of the property. You are looking for a mortgage to make up the difference. That would be a mortgage of £90,000 so 90% of the value of the property. This 90% is what we call the Loan to Value.
Make sense? We hope so!
Now you are starting to get to grips with the idea that mortgage applications can be complicated and require some explaining! We suggest that you find a reputable mortgage advisor to help you navigate all this. The best way to find one is to ask your friends and family for a recommendation or check out the google reviews of some advisors near you.
We believe that the best way to sort your mortgage is to find yourself an advisor who will take the time to explain all this fiddly jargon to you in a way that you can trust and understand. Hudson Rose is a 5 star rated local brokerage serving Cirencester and beyond so give us a call today and let us guide you through this complicated process.
I’ll be back soon with more mortgage jargon translated just for you!
Rave safe
Graham
And for more helpful tips, check out these blogs:
What does ‘remortgage’ actually mean?
5 ways your family might help you buy your first home
What is ‘mortgage affordability’?
