Loan-to-value (LTV) meaning and how to calculate your LTV

Loan-to-value (LTV) meaning

Loan-to-value (LTV) is the percentage of a property’s value that you borrow with your mortgage.

In simple terms:

• Higher LTV usually means less equity at the start (you’ve put down a smaller deposit)
• Lower LTV usually means more equity at the start (you’ve put down a larger deposit)

Because LTV is a quick way to measure how much of the property value is being financed, it’s one of the first things lenders consider when deciding what mortgage options and pricing to offer.

How lenders use LTV

Lenders use LTV to help them understand the risk profile of a mortgage.

If house prices fall, lenders want to know there’s enough equity in the property to help protect their position. That’s why LTV can affect:

• Mortgage pricing: higher LTVs are often priced less competitively than lower LTVs
• Product availability: not every lender offers every product at every LTV level
• Lending conditions: some lenders may apply tighter conditions as LTV rises

It’s also important to remember that LTV is not the only factor. Lenders will also consider affordability, credit history, income and outgoings, and the property type.

How to calculate LTV (loan-to-value)

The standard formula is:

LTV % = (Mortgage amount ÷ Property value) × 100

Worked example

If you buy a home for £250,000 and your mortgage is £225,000:

• LTV = (£225,000 ÷ £250,000) × 100
• LTV = 90%

Using deposit instead of mortgage amount

Because Mortgage amount = Property value − Deposit, you can also calculate LTV like this:

LTV % = ((Property value − Deposit) ÷ Property value) × 100

LTV calculator (estimate)

You can use the calculation below to estimate your LTV.

Property value (£):

Deposit amount (£):

Estimated LTV %:

LTV % = ((Property value − Deposit) ÷ Property value) × 100

Educational note: this is an estimate. Your lender’s valuation and the way the loan is structured can affect the LTV used for pricing.

LTV bands: why it’s often “in steps”

Many lenders group LTV into bands (for example, 75%, 80%, 85%).

This matters because moving from one band to the next can change the range of products available and the pricing you’re offered.

It’s also worth noting that LTV is often assessed using the lender’s view of the property value. If the valuation comes in lower than expected, your LTV can move up into a higher band.

Typical LTV ranges you’ll hear about

While each lender has its own approach, LTV is commonly discussed in broad ranges:

• 80%–90%+ LTV: higher LTV (smaller deposit)
• 70%–75% LTV: mid-range
• 65% or lower LTV: lower LTV (larger deposit)

These ranges are useful for understanding the general market, but the exact products and pricing depend on the lender and the overall application.

Maximum LTV mortgages: what “high LTV” really means

In the mainstream market, mortgages are available at higher LTV levels, which typically means a smaller deposit.

However, a higher LTV does not automatically mean a mortgage will be available to you. Even when a product is advertised at a certain LTV, acceptance and terms can vary based on the wider application.

What’s a “good” LTV?

A “good” LTV is usually one that balances:

• the mortgage options you want to access
• the repayments you can comfortably afford
• the deposit you can realistically put down without stretching your budget

Many borrowers aim to reach a lower LTV band because it can improve the range of options and pricing available. But it’s not just about the number—overextending your deposit can reduce flexibility for costs like moving expenses, repairs, and emergency savings.

How LTV can affect monthly payments

Your monthly payment depends on multiple factors, but LTV influences two key inputs:

1. How much you borrow (higher LTV usually means borrowing more)
2. The interest rate you’re offered (higher LTV is often priced higher)

So, two borrowers buying the same property for the same term can end up with different repayments if their LTV (and therefore pricing) differs.

How to reduce your loan-to-value ratio

To reduce LTV, you generally need to either:

• increase equity (for example, saving a larger deposit)
• borrow less (for example, choosing a property that better fits your deposit)

Common ways borrowers reduce LTV include:

• saving a larger deposit
• building equity over time through regular mortgage repayments
• negotiating the purchase price where possible
• ensuring the property is valued appropriately

Because LTV is often assessed in bands, it can also help to consider whether your current LTV is close to a band boundary.

LTV for remortgages

LTV still matters when you remortgage, but the “deposit” concept changes.

Instead of using a new deposit, lenders typically look at:

• your current mortgage balance
• the current property value
• the resulting equity position

If your equity has improved since you bought—through repayments and/or property value changes—your LTV may be lower, which can affect the options available.

LTV for buy-to-let

LTV can also be relevant for buy-to-let lending.

Buy-to-let lenders often apply their own maximum LTV levels and product structures, which means the deposit required for buy-to-let can differ from residential mortgages.

As with residential lending, LTV may influence the rate and terms you’re offered alongside other buy-to-let considerations.

LTV and equity: what’s the difference?

• LTV is a ratio: how much you borrow compared with the property value.
• Equity is what you own: property value minus what you owe.

Equity can change over time as you repay your mortgage and as property values move.

Key takeaways

• LTV is the percentage of the property value you borrow.
• Lenders use LTV to help assess risk and to determine pricing and product availability.
• LTV is often assessed in bands, so small changes can matter.
• LTV affects purchase mortgages, remortgages, and can be relevant for buy-to-let.

LTV FAQs

Does LTV matter when I remortgage?

Yes. LTV can affect the rate and product options available when you remortgage. Lenders typically assess your equity position using your current balance and the current property value.

Will LTV affect buy-to-let mortgage rates?

It can. Buy-to-let lenders may price and structure products based on LTV and typically set their own maximum LTV levels.

What if my LTV is very high?

Very high LTV can limit the range of products available and may lead to higher pricing. Lenders may also apply additional conditions depending on the overall application.

Should I wait to get a lower LTV?

Waiting can help if you’re able to save more deposit or build equity. However, property values can move too, so LTV doesn’t always improve as quickly as expected. It’s often a trade-off between buying sooner and potentially accessing better pricing later.