Remortgage LTV: How Your Loan-to-Value Ratio Affects Your Next Deal

Your loan-to-value ratio at remortgage determines which rate tier you qualify for — and crossing a key threshold can save hundreds of pounds a year. LTV is recalculated at remortgage using your current outstanding balance and the current market value of the property, not the original purchase price. If prices have risen or you have paid down capital, your LTV may be meaningfully lower than when you first took out the mortgage.

What is LTV and how is it calculated at remortgage?

Loan-to-value (LTV) = (outstanding mortgage balance ÷ current property value) × 100. If your remaining mortgage is £180,000 and the property is now worth £300,000, your LTV is 60% — the threshold at which the best rates typically become available.

At remortgage, lenders use the current market value, not what you originally paid. Most require a desktop or physical valuation to confirm this. Some lenders use automated valuation models (AVMs) for straightforward cases, which can speed up the process significantly. The LTV figure on your current mortgage deal is irrelevant — what matters is the recalculated figure at the point of application.

The LTV thresholds that matter for remortgaging

UK mortgage lenders price their products in LTV “buckets.” The key thresholds where rates meaningfully improve are 90%, 85%, 80%, 75%, and 60% LTV. The sharpest improvements typically come between 85% and 80%, and between 75% and 60%.

In practice, the rate difference between 90% LTV and 60% LTV can be 1–1.5 percentage points. On a £200,000 mortgage, that is a difference of £2,000–£3,000 per year in interest. It is worth calculating whether a small lump-sum overpayment before remortgaging could push you across a threshold — even if the saving takes 12–18 months to recoup the overpayment, the lower rate is then locked in for the full fixed period.

How to improve your LTV before remortgaging

There are three ways to reduce your LTV heading into a remortgage: pay down more capital, wait for the property to increase in value, or do both. Most standard mortgages allow overpayments of up to 10% of the outstanding balance per year without early repayment charges (ERCs) — check your terms, as this varies by lender. Even regular overpayments of £100–£200 per month can move your LTV by several percentage points over a two-year fixed period.

If you believe your property value has increased since you took out the mortgage, it is worth requesting a valuation before applying. Some brokers will arrange an indicative desktop valuation at no cost before you formally apply. A higher property value reduces your LTV even without any additional payments — and in rising markets, many remortgage applicants find they have crossed a threshold they did not expect.

What happens if your LTV is too high to remortgage?

If your LTV is above 95%, your options on the open market are limited. Most mainstream lenders cap at 95% LTV for remortgages, and products become sparse above 90%. If you are in negative equity — where the outstanding balance exceeds the property value — remortgaging to a new lender is generally not possible. In that situation, product transfers (staying with your existing lender on a new rate) are typically the only route. Check your current lender’s retention products first; they are not always competitive, but they do not require a new LTV assessment.

For buy-to-let remortgages, the maximum LTV is typically 75–80%. Lenders also apply rental coverage tests — the rental income must usually cover 125–145% of the mortgage payment at a stressed rate — which can be a separate constraint from LTV. Use the rental yield calculator to check whether your rental income meets typical coverage requirements.

LTV and remortgage costs beyond the rate

Your LTV does not just affect the rate — it can also determine whether you pay a product fee, whether a free valuation is offered, and whether cashback deals are available. Lenders compete hardest at 60% and 75% LTV with fee-free products and free valuations. At higher LTV tiers, these incentives become less common. The total cost of switching (including any ERC on the existing deal, valuation fee, and legal fees on the new mortgage) should be compared against the interest saving over the new fixed period before committing.

The mortgage repayment calculator lets you model monthly payments at different rates so you can quantify exactly how much a given LTV improvement would save over the fixed term.

Key questions when approaching your remortgage

Before applying, it is worth establishing: what is my current LTV based on today’s estimated property value? Am I close to a threshold where a lump-sum overpayment would unlock a meaningfully better rate? Does my existing deal have ERCs that make overpaying before the end of the fixed period costly? What is the product transfer rate from my current lender compared to the open market?

These are not complex calculations, but they can make a substantial difference to the rate you are offered and the total interest you pay over the next two to five years. Starting this analysis three to six months before your current deal expires gives you time to act on what you find.

This article is for informational purposes only. Speak to a qualified financial adviser for personalised recommendations. Your home may be repossessed if you do not keep up repayments on a secured loan.