LTV Calculator

How loan-to-value is calculated

Loan-to-value (LTV) is the ratio of the mortgage amount to the value of the property, expressed as a percentage. It is calculated by dividing the loan by the property value and multiplying by one hundred. A £180,000 mortgage on a £300,000 property gives an LTV of 60%. The deposit is simply the difference between the purchase price and the mortgage — so a 60% LTV means a 40% deposit.

LTV is one of the most important factors in mortgage pricing. Lenders use it to assess risk: the more equity in the property, the lower the risk of loss if the borrower defaults and the property is repossessed. Products at lower LTV bands typically carry lower interest rates, and a wider range of lenders are willing to lend.

Why LTV matters when remortgaging

LTV is recalculated at remortgage based on the current outstanding balance and the current market value of the property. If your property has increased in value since purchase, your LTV may have fallen significantly — potentially moving you into a better rate band even if you have not made overpayments. Getting a current market valuation before remortgaging can reveal rate savings that would not be obvious from the original purchase price.

Frequently asked questions

What LTV do I need for the best mortgage rates?

Rates typically improve at each significant LTV threshold — 95%, 90%, 85%, 80%, 75%, and 60%. The sharpest rate improvements tend to occur at 75% and 60%. Borrowers with an LTV at or below 60% generally have access to the lowest rates across the widest range of lenders.

Does the lender use the purchase price or a valuation?

Lenders instruct their own valuation of the property, which may differ from the agreed purchase price. If the lender's valuation comes in below the purchase price, the LTV calculation uses the lower figure — which can affect the rate tier and the maximum amount lenders will offer. This is known as a down-valuation.

Can I increase my deposit to hit a better LTV band?

Yes — if you are close to a rate threshold, increasing your deposit by a relatively small amount may move you into a lower LTV band and unlock a better rate. The interest saving over the mortgage term often outweighs the additional upfront deposit, particularly near the 75% and 60% thresholds.

How does shared ownership affect LTV?

On a shared ownership mortgage, the LTV is calculated based on the share of the property being purchased, not the full market value. This typically results in a higher LTV than on a standard purchase, which can limit available products and increase the rate.

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