What Is Loan to Value (LTV)?

Loan to value (LTV) is the percentage of a property's value you're borrowing. Calculate it by dividing your mortgage amount by the property value and multiplying by 100. For example, a £160,000 mortgage on a £200,000 property = 80% LTV. Lower LTV means better interest rates because lenders see less risk. Key LTV thresholds are 60%, 75%, 80%, 85%, 90%, and 95%.

Learn more about mortgage deposits in our detailed guide.

Learn more about remortgaging in our detailed guide.

Learn more about high ltv mortgages in our detailed guide.

What is loan to value (LTV)?

Loan to value (LTV) is the percentage of a property's value that you're borrowing as a mortgage. For example, if you're buying a £200,000 property with a £40,000 deposit, you're borrowing £160,000 - that's 80% LTV. Lower LTV means you're borrowing less relative to the property value.

How do I calculate my LTV?

Divide your mortgage amount by the property value, then multiply by 100. For example: £180,000 mortgage ÷ £225,000 property = 0.8 × 100 = 80% LTV. Or use the simple formula: LTV = (Mortgage Amount ÷ Property Value) × 100.

Why does LTV affect mortgage rates?

Lower LTV means lower risk for lenders - if you default, they're more likely to recover their money when selling the property. Lenders reward this lower risk with better interest rates. The biggest rate improvements typically come at 90%, 85%, 80%, 75%, and 60% LTV thresholds.

What is a good LTV for a mortgage?

Lower is generally better for rates. Below 60% LTV gets the best rates. 75-80% LTV is considered comfortable. 85-90% LTV is typical for first-time buyers. Above 95% LTV has limited options and higher rates. Your circumstances determine what's achievable.

Can I get a 100% LTV mortgage?

100% LTV mortgages (no deposit) are rare but exist through specific schemes like Skipton's Track Record mortgage for renters or guarantor mortgages where family members provide security. Most lenders require at least 5% deposit (95% LTV).

How does remortgaging affect my LTV?

When remortgaging, your LTV is based on the current property value vs remaining mortgage. If your home has increased in value or you've paid down your mortgage, your LTV will be lower, potentially qualifying you for better rates.

Quick Answer

How Does Loan to Value Work?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

LTV is your mortgage as a percentage of property value. Lower LTV = better rates. Calculate: (Mortgage ÷ Property Value) × 100. Key thresholds at 60%, 75%, 80%, 85%, 90%, 95%.

Loan to value (LTV) is one of the most important factors in determining your mortgage rate. It represents the proportion of a property's value that you're borrowing, with the remainder covered by your deposit. Lenders use LTV to assess risk - the more equity you have in the property, the more likely they'll recover their money if you default. This is why lower LTV mortgages attract better interest rates. When you remortgage, your LTV is recalculated based on your current property value and remaining mortgage, which can work in your favour if property values have risen.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Key Points

1LTV = (Mortgage Amount ÷ Property Value) × 100
2Lower LTV = lower rates (less lender risk)
3Key thresholds: 60%, 75%, 80%, 85%, 90%, 95%
4First-time buyers often start at 90-95% LTV
5Property value increases can lower your LTV
6Remortgaging may access better rates as LTV drops

Eligibility Criteria

95% LTV: Minimum 5% deposit required
90% LTV: 10% deposit, wider lender choice
85% LTV: 15% deposit, improved rates
80% LTV: 20% deposit, very competitive rates
75% LTV or below: Best available rates

Typical Timeframe

Your LTV naturally decreases over time as you pay off your mortgage principal. For a 25-year mortgage, you'll typically reduce LTV by 10-15% in the first 10 years through repayments alone. Property value growth can accelerate this.

Next Steps

1Calculate your current LTV
2Check rates at different LTV thresholds
3Consider overpayments to reduce LTV faster
4Get a property valuation if remortgaging
5Speak to a broker about rate options

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LTV	Deposit	Rate Quality	Lender Risk
60% or less	40%+	Best rates available	Lowest
75%	25%	Excellent rates	Low
80%	20%	Very good rates	Low-Medium
85%	15%	Good rates	Medium
90%	10%	Standard rates	Medium-High
95%	5%	Higher rates, fewer options	Higher

How Does Loan to Value Work?

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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