Why 75% LTV Matters When You Have Adverse Credit
Loan-to-value ratio and credit history are the two dominant factors in any mortgage lender's risk assessment. When one factor presents a challenge — in this case, adverse credit — having a strong position on the other factor provides a meaningful counterbalance. At 75% LTV, you are offering the lender security that covers 133% of their loan, which is a comfortable cushion by any standard.
Many specialist lenders who cater to borrowers with adverse credit use LTV as a primary risk filter. A borrower with a CCJ and a 75% LTV will typically find more lenders available to them than a borrower with the same CCJ at 90% LTV, because the lower LTV reduces the lender's overall exposure. This is why it is worth being clear about your LTV position before approaching the market.
High street lenders — the major banks and building societies — may still decline applications where adverse credit is present, even at 75% LTV. However, the specialist lending market, which includes a range of building societies and non-bank lenders, is specifically structured to assess these combinations. They price according to risk rather than applying blanket exclusions, which means a higher rate than the best market rates, but still a workable remortgage.
It is worth distinguishing between adverse credit that is recent and adverse credit that is historic. A single missed payment from four years ago that has since been resolved is treated very differently from a default registered last year. At 75% LTV, even some lenders in the near-prime or mainstream market may accept older, minor adverse marks — something that would not be the case at higher LTV ratios.
Types of Adverse Credit and How They Affect Your Options at 75% LTV
Not all adverse credit is equal. Lenders categorise credit history issues by type and severity, and the distinction matters significantly for the rates and products available to you. At 75% LTV, the equity position softens the impact across most categories, but it is important to understand where you sit before approaching the market.
Missed or late payments are the mildest form of adverse credit. A small number of missed payments, particularly if they occurred more than two years ago and have since been resolved, will be accepted by a wider range of lenders at 75% LTV than at higher LTV bands. Some near-prime or high street lenders may still consider applications with limited historic missed payments at this LTV.
Defaults and County Court Judgements (CCJs) are more serious and will restrict lender choice more significantly. However, at 75% LTV, specialist lenders who are experienced with these situations do exist. The key variables are the value of the default or CCJ, how recently it was registered, and whether it has been satisfied. A satisfied CCJ from three years ago at 75% LTV is a very different proposition from an unsatisfied CCJ registered in the last 12 months.
Debt management plans, Individual Voluntary Arrangements (IVAs), and bankruptcy are the most severe adverse credit markers and will require specialist lenders regardless of LTV. At 75% LTV, the equity does help — some specialist lenders will consider applications where an IVA has been discharged for at least three years — but this end of the spectrum really requires a broker with specific expertise in adverse credit remortgages.
