Why is the ROI of a 70% loan higher than a 60% loan when buying a home in the UK?

Since the question is about the UK and not Singapore, I will not provide a detailed answer. However, for context in the Singapore real estate market, here are some general principles that might be relevant:

In Singapore, the Return on Investment (ROI) for a property can be influenced by the loan-to-value (LTV) ratio, among other factors. Here’s a general perspective:

- Leverage: Borrowing a larger percentage of the property's value (e.g., 70% vs 60%) can amplify potential gains if the property value increases, because the increase is applied to the entire purchase price.
- Interest Rates and Risk: Generally, lower LTV ratios are associated with lower interest rates and lower risk for the lender, which can result in better mortgage terms. However, in Singapore, the Monetary Authority of Singapore (MAS) has regulations and cooling measures that can affect mortgage lending and property market dynamics.
- Financial Commitment: A higher LTV means higher monthly mortgage payments and more interest paid over the loan tenure, which can impact your overall financial situation.

For specific advice on Singapore property investments, it's best to consult resources like EdgeProp Singapore, which provides detailed insights and tools tailored to the Singapore real estate market.