Loan to Value (LTV)

Loan to value, commonly written as LTV, is the percentage of a property's value that you borrow as a mortgage. It is one of the most important numbers in any mortgage application because it directly affects the interest rates available to you and which lenders will consider your application.

The calculation is straightforward: divide your mortgage amount by the property value, then multiply by 100. For example, if you are buying a property worth £250,000 and borrowing £200,000, your LTV is 80%. The remaining 20% is your deposit or equity if you already own the property.

Why LTV matters

Lenders use LTV as a key measure of risk. A lower LTV means you have more of your own money in the property, so the lender faces less risk if property values fall. This is why lower LTV mortgages come with better interest rates. A lower rate also improves the result of the lender's stress test, which can increase the maximum you are allowed to borrow.

Key LTV thresholds

Lenders group their products into LTV bands, and crossing into a lower band can make a noticeable difference to your deal:

• 95% LTV — The maximum most lenders offer. Rates are highest and the choice of lenders is more limited.
• 90% LTV — A 10% deposit opens up most high-street lenders and brings rates down meaningfully.
• 85% LTV — Another rate improvement tier. Some lenders start offering enhanced income multiples at this level.
• 75% LTV — Access to the most competitive rates and widest product range. Many lenders offer their best terms here.
• 60% LTV — The lowest commonly used band. Rate improvements below 60% are usually marginal.

If you are close to one of these thresholds, even a small increase in your deposit can unlock better deals. This is especially relevant for first time buyers deciding how much to save before applying.

Last updated: April 2026