Mortgage Loan to Value Ratio: What You Need to Know

Your loan to value ratio is an important aspect of your mortgage. This ratio determines how much you can borrow when taking out a mortgage or home equity loan. Here is what you need to know about your home’s loan to value ratio.

Mortgage lenders look at your home’s loan to value ratio when approving your loan. Loan to value ratio is a calculation based on how much you owe and what the value of your home is. If your home for example, is worth $250,000 and you owe $60,000, your loan to value ratio is 24%. ($60,000/$250,000 * 100 = 24%)

The lower this percentage is, the more equity you have in your home. Mortgage lenders typically do not want loan to value ratios that are higher than 80%. If your loan to value ratio is greater than this amount you may have to find a non-traditional lender to refinance your mortgage or take out a home equity loan.

As a homeowner it is best to maintain at least 80% loan to value to protect yourself from economic uncertainty. If you go over 80% loan to value and property values decline, it is possible to wind up owing more than your home is worth. This can lead to serious problems with your mortgage lender. You can learn more about mortgage loans, including common mistakes many homeowners make, by registering for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

The Various Home Purchase Loan Options

Home purchase loans as the name suggests are generally provided to purchase a house. Before buying a home one need to educate himself about various HOME PURCHASE LOAN OPTIONS available in the UK market. Following are some of the options popular with the buyers:

Fixed interest rate loan- in a fixed interest loan the rate of interest remains fixed throughout the repayment term. This loan is chosen by borrowers who want to counter future increase in interest rates.

Variable interest rate loan- as the name signifies a variable interest rate loan comes up with variable rate of interest. The interest rate of the loan fluctuates with the base rate announced by Bank of England. These loans are popular among borrowers who want to take advantage of decrease in interest rates in the nearby future.

Home equity loans- home equity loans are taken against the equity available in your present home. This loan is mostly favoured by people who are buying their second home.


Home mortgage loans home mortgage loans are availed against your house. These loans are especially helpful for borrowers who don’t have any security or guarantee to offer to the lender. So, the house you buy becomes the collateral in such a case.

The increased competition in the market has compelled lenders to come up with loan packages on attractive terms. Some lenders offer various liberties in repayments like payment holidays, long repayment tenure etc. People are therefore advised to explore and shop around in the market before sealing the deal.

About The Author
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Home-Loans-For-Everyone as a finance specialist.

For more information please visit: http://www.home-loans-for-everyone.co.uk

Home Owner Loan - 5 Tips To Get Yourself Ready For A Home Loan Application

So you need to get a home loan to finance that new house? There are some things you must know to prepare yourself adequately for a favorable application.

1) Know your state of finance. Tabulating the numbers is the key to avoid future disappointment. Is the price of the new house within the range you can afford? How much you can afford will also be influenced by home-related cost like furniture, home accessories and gadgets, insurance, utility bills etc. Self-awareness through budget planning--a few months beforehand--enables you to anticipate for the amount of loan required so that you can repay it promptly.

2) Know your credit report is in good stead. Your credibility is what the lending company looks for in your financial background before it can approve a loan. You can find out your credit score through reports generated from Equifax Score Power, True Credit, or Consumerinfo. A low score almost always leads to high interest rates. Many factors determine your score, including length of history, income, a profiling of your debt and credit obligations etc. If there are areas in your report which can be improved, like closing unnecessary accounts, take the necessary actions and wait around 60 days for the latest status to take effect, then get another copy of your credit report.

3) Know all that you need about the fees and interest rates. Do a comparison of all the lending companies before settling down on the suitable one. Check that all terms and conditions are understood, and there are no other hidden cost. If you have questions, simply ask to clear the air.

4) Know what's the repayment method is like. Depending on the company's policy, you may pay back a portion of the loan plus interest, just the interest for the whole length of the loan plan or the complete sum including interest after the plan is completed. Discuss with the loan officer about your personal repayment capability to reach a mutual agreement.

5) Know what documents are needed for the application. Again check with the loan officer early to give yourself time to prepare them, which are likely to be your pay slip, home insurance policy, driver's licence and social security information.

Finally, if you can apply for a loan online, you are most encouraged to do so. Instant Internet access gives you convenience and cuts short the time instead of you having to wait in the office for the paperwork to be done.

Justin Koh is a freelance writer whose articles have appear in most major ezines. You can find more of these at: http://www.homeloanscenter.info