60% Is The Magic Mortgage Number

If you have at least 40% equity in your home, you're  far better off in the mortgage market.

The credit crunch has made a big impact on the mortgage market but it's still possible to get decent mortgage deals - at least for many of us. Indeed, we've said before that there are good mortgages on offer if you have a big deposit or a significant slice of equity in your home.

And now we've done some more research which backs that up further.

Our number crunchers have discovered that 60% is the magic number when it comes to getting a mortgage. If you only need to borrow less than 60% of the value of a property, you can choose from as many as 4,588 different products!

But if you need to borrow more than 95% of the value of your home, there are only 74 mortgage products available. That number rises to 466 products for homeowners with 10% equity in their property. The range of mortgages jumps seven-fold to 3,360 for borrowers who own a quarter of their homes.

Obviously, this is bad news for first-time buyers who don't have a big deposit. And if you bought your first home within the last two or three years, you may not have much equity in your home - perhaps none at all - once you've taken falling house prices into account.

I just thank my lucky stars that I was able to buy my first home back in 2001 which means that house prices would have to fall a long way before my loan-to-value (LTV) went over 60%. (Loan-to-value is effectively the reverse of a deposit. So if I have a 30% deposit, the LTV on my purchase is 70%.)

That said, if you're looking for a mortgage with a big LTV, don't give up hope. There are mortgages out there. Read this article by Jane Baker which outlines some of your options. Or get in touch with a mortgage broker who might be able to help you.

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