What Is Loan-to-Value (LTV)? Simple Explanation
Your LTV ratio directly affects the mortgage deal you get. Learn what it means, how to calculate it, and what you can do to improve it.
If you’re applying for a mortgage in the UK — whether you’re a first-time buyer saving for your first deposit, a homeowner looking to remortgage onto a better deal, or a buy-to-let investor expanding your property portfolio — one number will follow you through the entire process: your loan-to-value ratio, commonly shortened to LTV. It’s one of the single most important figures that mortgage lenders use when deciding whether to approve your application, what interest rate to offer you, and how much they’re willing to lend. Despite its significance, LTV is often misunderstood or overlooked by borrowers, and that can cost you thousands of pounds over the lifetime of your mortgage.
Your LTV ratio is, at its simplest, the percentage of a property’s value that you need to borrow from a lender. The remaining percentage is covered by your deposit (if you’re buying) or your existing equity (if you’re remortgaging). A higher LTV means you’re borrowing a larger share of the property’s value, which represents more risk for the lender — and that risk is passed on to you through higher interest rates, stricter lending criteria, and fewer product choices. Conversely, a lower LTV signals to lenders that you have significant skin in the game, which typically unlocks the most competitive rates on the market.
In this comprehensive guide, we break down everything you need to know about loan-to-value ratios in the context of UK mortgages. We’ll explain the precise definition and formula, walk you through a worked example so you can calculate your own LTV in seconds, show you the key LTV thresholds that lenders use to price their products, and give you practical strategies for improving your ratio — whether that means saving a larger deposit, choosing a different property, or making overpayments on an existing mortgage. We’ve also built an interactive LTV calculator right into this page so you can see exactly where you stand before speaking to a broker.
What does loan-to-value mean?
The loan is the mortgage amount you borrow. The value is the purchase price (or current value) of the property. So the definition of LTV is: how much you borrow versus how much you’re paying for the property. The ratio is expressed as a percentage.
The loan is the mortgage amount you borrow. The value is the purchase price (or current value) of the property. So the definition of LTV is: how much you borrow versus how much you’re paying for the property. The ratio is expressed as a percentage. Understanding your LTV is especially important for first-time buyers working out how much deposit they need.
A lower LTV means you own more of your property outright — and lenders reward that with better rates.
How to calculate your LTV
You can use our LTV calculator to work out your ratio in seconds. Enter the property value and the amount you want to borrow (property value minus your deposit or equity). The calculator shows your LTV percentage and which rate band you sit in.
This calculator tells you your loan-to-value (LTV) ratio based on the property value, your deposit or equity, and the amount you’re borrowing.
You can use our LTV calculator to work out your ratio in seconds. Enter the property value and the amount you want to borrow (property value minus your deposit or equity). The calculator shows your LTV percentage and which rate band you sit in.
Example loan-to-value ratio
If you buy a property for £100,000 and have a £25,000 deposit, you need a mortgage of £75,000. The remaining £25,000 is your equity (the part you own outright). Your LTV ratio is 75%.
Formula: LOAN ÷ PROPERTY VALUE × 100. Example: £75,000 ÷ £100,000 × 100 = 75 (LTV is 75%).
If you buy a property for £100,000 and have a £25,000 deposit, you need a mortgage of £75,000. The remaining £25,000 is your equity (the part you own outright). Your LTV ratio is 75%. Try our LTV calculator to work out your own ratio instantly.
Formula: LOAN ÷ PROPERTY VALUE × 100. Example: £75,000 ÷ £100,000 × 100 = 75 (LTV is 75%). You can also use our repayment calculator to see how different LTV levels affect your monthly payments.
Quick maths
Deposit ÷ Property Value × 100 gives you your equity percentage. Subtract that from 100 to get your LTV.
Why is LTV important?
Your LTV ratio directly affects the mortgage deal you get. Lenders generally offer better interest rates to borrowers who need to borrow less relative to the property value.
A lower LTV gives the lender more security if house prices fall. If you have a high LTV mortgage and the property value drops below the loan amount, the lender is at greater risk if you cannot repay. So higher LTVs usually mean higher rates.
Your LTV ratio directly affects the mortgage deal you get. Lenders generally offer better interest rates to borrowers who need to borrow less relative to the property value.
A lower LTV gives the lender more security if house prices fall. If you have a high LTV mortgage and the property value drops below the loan amount, the lender is at greater risk if you cannot repay. So higher LTVs usually mean higher interest rates.
Key LTV thresholds
Most lenders price in bands: 60%, 75%, 80%, 85%, 90%, 95%. Moving into a lower band — even by 1% — can unlock noticeably better rates and more product options.
Low LTV vs High LTV
| Low LTV (≤75%) | High LTV (90%+) |
|---|---|
| Access to the best interest rates | Higher interest rates |
| Wider range of mortgage products | Fewer lenders and products |
| Lower monthly repayments | Risk of negative equity |
| More equity buffer if prices fall | May require mortgage insurance |
Preferable loan-to-value ratios
The best rates typically apply when your LTV is below 80%. You can still get a mortgage at 90% or 95% LTV, or even a no-deposit mortgage, but these are high LTV deals and interest rates are usually higher to reflect the extra risk.
The best mortgage rates typically apply when your LTV is below 80%. You can still get a mortgage at 90% or 95% LTV, or even a no-deposit mortgage, but these are high LTV deals and interest rates are usually higher to reflect the extra risk. See our guide on saving for a deposit for tips on reaching a lower LTV band.
Typical LTV bands
Decisions that could affect your LTV
Being able to achieve a low LTV depends on your circumstances, the property you want, and how quickly you need a mortgage. Some borrowers are happy to pay more over time to get on the ladder sooner with a smaller deposit.
If you want to improve your LTV to access better rates, you could consider:
Being able to achieve a low LTV depends on your circumstances, the property you want, and how quickly you need a mortgage. Some borrowers are happy to pay more over time to get on the ladder sooner with a smaller deposit. Use our borrowing calculator to see how much you could borrow at different deposit levels.
If you want to improve your LTV to access better rates, you could consider:
Consider a cheaper property
- If your target home pushes you into a higher LTV band, lowering your budget could secure a better mortgage deal and save you money long term.
Save a larger deposit
- A bigger deposit means more equity and a lower LTV. If saving will take time, weigh that against whether house prices might rise in the meantime.
Type of mortgage
- With a repayment mortgage you gradually pay off the loan, so your equity grows and your LTV falls over time. Overpaying (where allowed) can speed this up.
Invest in your property
- Improvements that add value can reduce your LTV. The same applies in areas where house prices are rising quickly, such as regeneration areas.
Work with a mortgage broker
- A specialist adviser can explain how LTV works for your situation, which lenders are most flexible, and where the best deals are.
Related guides
- First-Time Buyer Guide
Learn about deposits, government schemes, and the step-by-step process of buying your first home.
- How Much Can I Borrow?
Understand income multiples, affordability tests, and what affects your maximum borrowing amount.
- Mortgage Rates Explained
Compare fixed, variable, and tracker rates to find the right type for your situation.
- Deposit Guide for First-Time Buyers
Work out exactly how much deposit you need and explore ways to save faster.
- Regulator
- FCA register
- Updated
- 24 February 2026
More guides
Browse all- Guide7 min read
Mortgage Overpayments — How They Save You Thousands
Discover how overpaying your mortgage — even by a small amount each month — can dramatically reduce your interest bill and shorten your term.
by Allan18 Feb 2026
- Guide8 min read
Right to Buy Mortgage Guide UK — Council Tenant to Homeowner
The Right to Buy scheme lets council tenants in England purchase their home at a significant discount. This guide covers eligibility, discount levels, mortgage options, and the full application process.
by Saha5 Feb 2026
- Guide9 min read
Mortgage Affordability — What Lenders Really Look At
UK lenders look far beyond your salary when deciding affordability. Understand income multiples, stress tests, outgoings, and credit checks so you can maximise your borrowing power.
by Komal20 Jan 2026
Speak to an expert today
Maximise your chance of approval with a dedicated specialist broker. Get tailored advice and compare deals from 90+ lenders.