Remortgage at 60% LTV

Why 60% LTV Gets You the Best Remortgage Rates

Loan-to-value ratio is one of the single most important factors in determining what mortgage rate a lender will offer you. At 60% LTV, you are borrowing just three-fifths of your property's value, which means the lender's risk is substantially lower than at higher LTV levels. If property prices were to fall, there is a significant equity buffer protecting the lender's investment.

This reduced risk translates directly into lower interest rates for you as the borrower. Here is why the 60% LTV bracket is so advantageous:

• Lowest available rates — The 60% LTV bracket is typically where lenders offer their most competitive pricing. While some lenders do offer an even lower rate at 50% LTV, the vast majority of the market's best deals are available at the 60% threshold.
• Widest choice of lenders — At 60% LTV, virtually every lender on the market will want your business. This competition between lenders works in your favour, driving rates down and improving the terms on offer.
• Most favourable terms — Beyond just the interest rate, lenders may offer more attractive terms at 60% LTV, including lower arrangement fees, free valuations, free legal work, and cashback incentives.
• Stronger negotiating position — With 40% equity and a low LTV, you are a low-risk borrower that lenders actively compete for. This puts you in a strong position to negotiate or to be selective about which deal you choose.

The difference in rate between 60% LTV and higher LTV brackets can be meaningful. For example, the gap between the best 60% LTV rate and the best 80% LTV rate might be 0.3% to 0.5% or more. On a mortgage of two hundred thousand pounds, this could translate to savings of several hundred pounds per year, or several thousand over the course of a typical fixed-rate period.

How to Work Out Your LTV Ratio

Before you start comparing remortgage deals at 60% LTV, it is important to confirm that your LTV ratio genuinely falls within this bracket. Getting your numbers right upfront will save you time and avoid the disappointment of applying for a deal you do not qualify for.

The LTV calculation

Loan-to-value is calculated as a simple percentage: divide your outstanding mortgage balance by the current market value of your property, then multiply by 100. For example, if you owe one hundred and fifty thousand pounds on a property worth two hundred and fifty thousand pounds, your LTV is 60%.

Finding your current mortgage balance

Your current mortgage balance can be found on your latest mortgage statement or by logging into your lender's online portal. Make sure you use the total outstanding balance, including any fees that may have been added to the loan, rather than just the original borrowing amount.

Estimating your property value

This is often the trickier part. You can get an approximate idea of your property's current value by:

• Online valuation tools — Websites such as Zoopla and Rightmove offer estimated valuations based on local sold prices. These provide a useful starting point but can be imprecise.
• Checking comparable sales — Look at what similar properties in your street or immediate area have sold for recently. The Land Registry records all property sales and this data is publicly available.
• Estate agent valuations — Local estate agents will often provide a free market appraisal of your property. Getting two or three opinions can give you a reasonable range.
• Professional RICS valuation — For the most accurate figure, you can commission a professional valuation from a Royal Institution of Chartered Surveyors member, though this comes with a fee.

Bear in mind that the lender will carry out their own valuation as part of the remortgage process, and their figure may differ from your estimate. If you are close to the 60% LTV boundary, it is worth being conservative with your property value estimate to avoid falling into a higher LTV bracket when the lender's valuation comes through.

What If You Are Close to 60% LTV?

If your LTV calculation puts you slightly above the 60% threshold, perhaps at 62% or 63%, it may be worth considering strategies to bring your ratio down to 60% and unlock better rates. Even a small reduction in your LTV can produce meaningful savings.

Making a lump sum overpayment

If you have savings available, making a lump sum payment to reduce your mortgage balance before remortgaging can push your LTV below 60%. Calculate how much you would need to pay off to reach the threshold and weigh this against the potential interest savings over the term of your new deal. In many cases, the maths works strongly in your favour.

Using regular overpayments

If your current mortgage deal allows overpayments without penalty, typically up to 10% of the balance per year, you could make regular additional payments in the months leading up to your remortgage. This gradually reduces your balance and improves your LTV position.

Waiting for property values to increase

If property values in your area are rising, waiting a few months before remortgaging might see your property value increase enough to bring your LTV below 60%. However, this is a gamble, as property values can go down as well as up, and you also need to factor in what rate you are currently paying while you wait.

Home improvements that add value

Strategic home improvements can increase your property's value and reduce your LTV. Improvements that typically add value include kitchen and bathroom renovations, extensions, loft conversions, and general modernisation. However, the cost of the improvements needs to be weighed against the mortgage savings, and not all improvements add value equal to their cost.

A mortgage broker can help you run the numbers and determine whether the effort to reach 60% LTV is worthwhile in your specific situation. In some cases, the rate difference between 60% and 65% LTV is relatively small, and the financial benefit of pushing below 60% may not justify tying up savings or incurring other costs.

Choosing the Right 60% LTV Remortgage Deal

With access to the best rates on the market, choosing the right deal from the wide array of options available at 60% LTV can feel overwhelming. Here is how to narrow down your choices and select the deal that truly offers the best overall value for your circumstances.

Fixed vs variable

At 60% LTV, you will find highly competitive rates across all product types, including fixed rates, tracker rates, and discount variable rates. Your choice between these should be driven by your appetite for risk, your view on interest rate movements, and how long you plan to keep the deal. Fixed rates offer certainty, while trackers and variable rates offer the potential for savings if rates fall.

Choosing the right term

At this LTV level, you can choose from 2 year, 3 year, 5 year, 7 year, and 10 year fixed-rate deals, as well as various tracker options. Shorter fixes tend to offer slightly lower rates but mean you will remortgage more frequently, incurring costs each time. Longer fixes provide greater certainty but may carry a modest rate premium.

Fee versus rate trade-off

Many of the lowest rates at 60% LTV come with arrangement fees that can exceed one thousand pounds. On larger mortgages, paying the fee for a lower rate often makes sense because the interest savings over the deal period outweigh the fee. On smaller mortgages, a fee-free deal with a slightly higher rate may work out cheaper overall. Always do the total cost calculation before deciding.

Additional features

Look for deals that include free valuation and free standard legal work for remortgages, as these can save you several hundred pounds. Some deals also offer cashback on completion, which can offset other costs. Overpayment facilities, offset options, and portability are also worth considering depending on your plans.

Exclusive broker deals

Some of the best 60% LTV deals are only available through mortgage brokers and cannot be accessed by applying directly to the lender. A whole-of-market broker will have access to these exclusive products and can ensure you are comparing the fullest possible range of options.

Remortgaging at 60% LTV to Release Equity

With 40% equity in your property, you are in a strong position if you want to release some of that equity when you remortgage. Equity release through remortgaging involves borrowing more than your current outstanding balance, with the additional funds paid to you in cash.

Common reasons for releasing equity

Homeowners at 60% LTV often consider releasing equity for a range of purposes, including:

• Funding home improvements or extensions to increase the property's value and their living space.
• Consolidating higher-interest debts such as credit cards, personal loans, or car finance into a single, lower-rate mortgage payment.
• Helping family members, such as contributing to a child's house deposit.
• Making investments or funding other major expenditure.

How equity release affects your LTV

If you borrow additional funds, your LTV will increase. For example, if you are currently at 60% LTV and borrow enough to bring you to 75% LTV, you will move into a higher LTV bracket and may not qualify for the very best rates. It is important to understand where your LTV will sit after the additional borrowing and how this affects the rates available to you.

Affordability considerations

Lenders will assess whether you can afford the higher mortgage payments that come with a larger loan. They will look at your income, expenditure, and other financial commitments to ensure the increased borrowing is sustainable. Just because you have the equity does not automatically mean the lender will approve additional borrowing.

Tax and financial implications

Be aware that consolidating debts into your mortgage, while reducing your monthly outgoings, can cost more in total over the life of the mortgage because you are spreading the repayment over a much longer period. It is also worth noting that your home secures the mortgage, so any additional borrowing increases the amount you could lose if you were unable to keep up repayments. Always take independent financial advice before releasing equity, particularly for debt consolidation purposes.

A qualified mortgage adviser can help you understand how much equity you could release, how it would affect your rate and monthly payments, and whether it is the right decision for your overall financial situation.

How to Get Started with Your 60% LTV Remortgage

If you have confirmed that your LTV is at or below 60% and you are ready to explore your remortgage options, here are the practical steps to get the process moving.

Check your current deal

Find out when your current fixed rate, tracker, or discount period ends. If it is within six months, now is the ideal time to start looking, as most lenders will let you lock in a new rate well in advance. Also check whether any early repayment charges apply if you want to switch before your current deal expires.

Gather your documents

You will need proof of identity, proof of income (recent payslips if employed, or tax returns and accounts if self-employed), bank statements for the last three months, and details of your current mortgage including the outstanding balance and remaining term.

Check your credit report

Review your credit file with all three major credit reference agencies: Experian, Equifax, and TransUnion. Correct any errors and ensure all information is up to date. Being on the electoral roll and having no recent adverse markers will help you access the very best rates.

Speak to a broker

A whole-of-market mortgage broker will compare deals from across the entire market on your behalf, including exclusive products not available to the public. They will take into account your circumstances, preferences, and financial goals to recommend the deals that offer the best overall value. At 60% LTV, you have the luxury of choosing from the market's finest rates, and a broker ensures you do not miss the very best options.

Consider staying with your current lender

Your existing lender may offer a product transfer, allowing you to switch to a new deal without a full application, valuation, or legal work. While product transfers are convenient, they may not always offer the most competitive rate. Compare your lender's offer against the wider market before making a decision.

Your home may be repossessed if you do not keep up repayments on your mortgage. Always seek independent financial advice before making any decisions about your mortgage arrangements.