Loan-to-Value (LTV) is one of the most important concepts in mortgages. It determines your interest rate, the size of deposit you need, how lenders assess your application and even whether you can access certain products. Understanding LTV makes planning your deposit and mortgage strategy far easier.
This guide breaks down what LTV means, how it’s calculated, which LTV bands lenders use, how it affects your monthly payments, and how to improve your LTV before applying.
What Is LTV?
LTV (Loan-to-Value) is the percentage of the property’s value that you borrow from the lender. The lower your LTV, the lower the risk for the lender — and typically the better your interest rate.
Example:
- Property value: £300,000
- Deposit: £45,000
Your mortgage would be £255,000.
LTV = (Mortgage ÷ Property Value) × 100 = £255,000 ÷ £300,000 × 100 = 85% LTV
Why LTV Matters
LTV affects:
- ✔️ Your interest rate
- ✔️ Maximum borrowing
- ✔️ Product selection
- ✔️ Eligibility with different lenders
- ✔️ Monthly payments
Higher LTV = higher risk = usually higher interest rate. Lower LTV = lower risk = usually better rates.
The Main LTV Bands Used by Lenders
Lenders use set LTV brackets. Crossing into a lower band can significantly reduce your interest rate.
- 95% LTV (5% deposit)
- 90% LTV (10% deposit)
- 85% LTV (15% deposit)
- 80% LTV (20% deposit)
- 75% LTV (25% deposit)
- 60% LTV (40% deposit)
These apply to everything from first-time buyer mortgages to major remortgages and even buy-to-let mortgages.
Worked Example: LTV Impact on Rates
Scenario: £300,000 purchase
| Deposit | LTV | Rate |
|---|---|---|
| 5% (£15,000) | 95% LTV | Highest |
| 10% (£30,000) | 90% LTV | Lower |
| 25% (£75,000) | 75% LTV | Much lower |
If you’re focused on deposit strategy, see our full Deposit Requirements Guide.
How LTV Affects Affordability
LTV doesn’t directly change how much you can afford — but it impacts the rate offered. Lower rates mean lower payments, which can help affordability checks.
For a detailed look at borrowing limits, see our How Much Can I Borrow? guide.
How to Lower Your LTV
There are several ways to reduce your LTV before applying:
- ✔️ Increase your deposit
- ✔️ Pay down debts or build savings
- ✔️ Look at slightly lower-priced properties
- ✔️ Receive a gifted deposit
- ✔️ Wait for property prices to stabilise or adjust
Even a small improvement (e.g., moving from 91% to 89%) can unlock lower-rate products.
LTV for First-Time Buyers
Most first-time buyers fall into the 90–95% LTV range. Many products and government schemes are available at these levels.
Depending on affordability, some buyers may also consider:
LTV for Buy-to-Let Mortgages
Buy-to-let mortgages are much stricter, with LTV limits commonly at:
- 75% maximum with most lenders
- 80% with a few specialist lenders
Rental income must also pass BTL stress testing, which may require a larger deposit.
LTV for Remortgages
When remortgaging, LTV is calculated using your current property value. If your home has risen in value, your LTV may be lower — improving your rate options.
For timelines and steps, see our Remortgage Timeline Guide.
LTV for Home Improvements
If you’re remortgaging to raise funds for improvements such as extensions or refurbishments, lenders may allow higher LTVs depending on the project.
See the full breakdown in our Home Improvements Remortgage Guide.
Can You Get a Mortgage With a High LTV?
Yes — 90% and 95% LTV mortgages are widely available, especially for first-time buyers. However, interest rates will be higher than mid-range LTV products.
If you’re unsure whether high LTV or a government scheme suits you better, consider the differences in our Shared Ownership Guide.
When LTV Changes During the Application
LTV can change if the property valuation differs from the agreed purchase price. For example:
- ❌ A down valuation increases your LTV
- ✔️ An up valuation reduces your LTV
For deeper insight into lender valuations, read our valuation section within the Remortgage Timeline Guide.
Next Steps
If you’d like clarity on how your deposit and property value affect your LTV, affordability and available mortgage products, we can connect you with an FCA-regulated adviser who can assess your situation in detail.
You can also explore related guides such as Deposit Requirements or use our mortgage calculators to estimate figures.
All mortgage advice is provided by FCA-regulated advisers. Your home may be repossessed if you do not keep up repayments on your mortgage.
FAQs
What is a good LTV?
75% and below typically unlock the best mortgage rates.
Does LTV affect how much I can borrow?
Indirectly — lower LTV often means better rates, which can help pass affordability.
What happens if the property is down-valued?
Your LTV increases, and the lender may offer a different rate or require a larger deposit.
Can LTV change during my mortgage term?
Yes — as you repay the mortgage or property values rise, your LTV improves.
Do all lenders use the same LTV bands?
Most follow similar bands, but product availability varies by lender.