What Is LTV?
LTV, or loan-to-value, is the ratio between the amount you borrow on your mortgage and the value of the property. It is expressed as a percentage. You can calculate your mortgage LTV using our free online LTV calculator.
When you apply for a mortgage or remortgage, your lender will assess the value of the property using either a physical valuation or a desktop valuation. Your LTV is then calculated using the lender’s valuation, not always the price you pay or what you believe the property is worth.
A higher LTV means you are borrowing a larger proportion of the property value, usually because you have a smaller deposit or less equity. A lower LTV means you are borrowing less, because your deposit or equity is higher.
LTV Mortgage Meaning and Why It’s Important
LTV is one of the key factors lenders use when deciding whether to approve a mortgage, and how to price it. In simple terms, the higher the LTV, the higher the risk the lender is taking on. That often translates into higher interest rates, fewer product options, and sometimes tighter underwriting.
A high LTV mortgage is one where the loan makes up most of the property value. For example, borrowing £90,000 on a £100,000 property gives an LTV of 90% and a deposit of 10%. A low LTV mortgage is one where the deposit or equity is more substantial. Borrowing £60,000 on a £100,000 property gives an LTV of 60% and a deposit of 40%.
This matters because lenders tend to offer their most competitive pricing to borrowers with lower LTVs. The difference between LTV bands can be meaningful, particularly around common breakpoints such as 90%, 85%, 75% and 60%. In practice, even a small improvement in deposit size or valuation outcome can sometimes move you into a cheaper band.
How LTV Affects Mortgage Rates and Deals
When remortgaging, your interest rate and overall product pricing will usually reflect the LTV you are borrowing at. Lower LTVs typically attract better rates because the lender has a larger cushion if property prices fall.
It is also worth noting that headline rates do not tell the full story. Product fees, incentives, and the total cost over the initial deal period can matter just as much as the interest rate. Two deals at the same LTV may price very differently once fees are taken into account.
What Can Affect Your LTV Mortgage?
The Amount You Pay Towards Your Home
If you are moving home and you already own a property, the equity you have built up can usually be used as part of your deposit on the next purchase. That reduces the amount you need to borrow and lowers your LTV.
If you are a first-time buyer, your LTV is driven primarily by the deposit you have saved. Deposits can be difficult to build, which is why first-time buyers often borrow at higher LTVs.
The Property Valuation
Your LTV is based on the lender’s valuation. If the valuation comes in lower than expected, your LTV will increase, even if your deposit amount has not changed. This can affect the deals available and the rate you are offered.
This is particularly relevant when remortgaging, where borrowers often assume their property value has risen. Sometimes that is true, but the lender’s valuation can still be more conservative than expected, which can keep you in a higher LTV band.
The Level of Risk
Lenders perform multiple checks to assess risk, and LTV is one of the most important. The more you borrow relative to the property value, the more exposed the lender may be if they need to repossess and sell the property.
For most mainstream lenders, the highest LTV commonly available on a residential mortgage is 95%, subject to eligibility and affordability. At higher LTVs, you may also find the lender asks for more supporting documentation to get comfortable with the application.
A higher LTV can reduce the range of deals available and may lead to higher rates or less favourable terms. That does not mean high LTV borrowing is “wrong”, but it does mean you need to be more careful about affordability and product structure.
Deals Available
Our How Much Can I Borrow? calculator and remortgage calculator will help you estimate borrowing. You can then use our LTV calculator to compare your borrowing amount to your deposit (for buyers) or your equity (for remortgagers).
If you are close to an LTV breakpoint, it is often worth modelling different scenarios. A slightly higher deposit, a small reduction in borrowing, or a different valuation outcome can sometimes move you into a cheaper pricing tier.
Speak to an Adviser
If you would like to understand what your LTV means for your mortgage options, or you are planning a remortgage and want to sense-check your likely pricing band, speak to one of our experienced advisers at John Charcol.
