LTV Calculator: Work Out Your Loan to Value Ratio

Use the LTV calculator

Type in your loan amount (or outstanding mortgage balance) and the property value or purchase price. The tool above divides one by the other and shows your loan to value ratio as a percentage, then tells you which lending band that falls in. Adjust the loan or the value to see how a bigger deposit, or a rise in your home's worth, pushes you into a cheaper band.

What loan to value actually means

Your loan to value ratio is the size of your mortgage compared with the value of the property, written as a percentage. If you borrow £180,000 against a £200,000 home, your LTV is 90% and your deposit (or equity) is the other 10%. It is the most important number in any mortgage application after affordability, because it tells the lender how much of their money is at risk if they ever had to repossess and sell.

The lower your LTV, the more of the property you own outright and the less exposed the lender is. That is why rates are tiered by LTV band: a borrower at 60% is offered noticeably cheaper deals than one at 95%, even on the same property, because the lender's risk is smaller. Lenders also set a maximum LTV they will go to. Most residential lenders cap at 95% for standard purchases, while buy-to-let lenders usually stop at 75% or 80%.

The ratio matters at three moments: when you buy (it decides how big a deposit you need and what rate you get), when you remortgage (a fallen LTV can unlock a better deal), and if values drop (a high LTV can tip into negative equity, where you owe more than the property is worth).

How the loan to value ratio is calculated

The formula is simple division. In plain words:

LTV = (loan amount ÷ property value) × 100

The loan amount is either the mortgage you are applying for (when buying) or your outstanding balance (when remortgaging). The property value is the purchase price when you buy, or the lender's surveyed valuation when you remortgage, not what you hope it is worth. Lenders use their own valuation, which can come in below an estate agent's asking price, so your real LTV may be higher than you expect.

Two related figures fall straight out of the same sum:

• Deposit or equity = property value − loan amount
• Deposit percentage = 100 − LTV

So a 90% LTV always means a 10% deposit, and an 85% LTV means a 15% deposit. If you want to know how much cash you need to reach a particular band, rearrange it: deposit needed = property value × (1 − target LTV). To clear a 90% LTV (10% down) on a £250,000 home you would need £25,000; to reach 85% you would need £37,500.

There is no official government rate behind LTV. It is a market measure, not a tax, so the bands and the rates attached to them are set by individual lenders and shift with the wider market. The Bank of England base rate and competition between lenders move the actual rates around, but the way LTV is worked out never changes.

Loan to value worked example

Take Aisha, a first-time buyer in Bristol. She has found a flat at £240,000 and has saved £24,000 towards it. Her loan to value works out like this:

• Loan needed = £240,000 − £24,000 = £216,000
• LTV = (£216,000 ÷ £240,000) × 100 = 90%

At 90% LTV she qualifies for mainstream deals, but the sharpest rates sit a band lower. If she could save another £12,000 to reach a £36,000 deposit, her loan drops to £204,000 and her LTV falls to 85% ((204,000 ÷ 240,000) × 100), moving her into a cheaper band. On a £204,000 balance, even a 0.3 percentage point rate improvement is worth roughly £600 a year in interest, so the extra saving can pay for itself.

Now a remortgage case. Marcus bought four years ago for £300,000 with a £270,000 mortgage (90% LTV). He has paid the balance down to £255,000, and a recent valuation puts the property at £330,000. His new LTV is (£255,000 ÷ £330,000) × 100 = about 77%. Both paying down the loan and the rise in value have pulled him under the 80% mark, so when his fix ends he can apply for the better-priced sub-80% deals rather than rolling onto a 90% rate.

One more, for buy-to-let. Priya wants a rental at £200,000 and her lender caps lending at 75% LTV. The most they will lend is £200,000 × 0.75 = £150,000, so she needs a deposit of at least £50,000 to get the deal across the line, before any fees or stamp duty surcharge.

Typical UK LTV bands and what they mean

Lenders price in tiers. The exact cut-offs vary, but most use bands at roughly these points. The lower your LTV, the cheaper the deals on offer.

Crossing a boundary is what saves money, not shaving a single percentage point. Going from 91% to 89% can move you a whole band and cut your rate; going from 78% to 77% within the same band changes little. The Bank of England publishes data on how mortgage pricing moves with risk, and the independent MoneyHelper guide to deposits and buying costs explains how a bigger deposit changes what you pay.

How to lower your LTV

A lower loan to value ratio is the most reliable way to a cheaper mortgage, and there are a few levers:

• Save a larger deposit. The most direct route when buying. Even pushing from 9% to 10% deposit can drop you out of the most expensive 95% band. Work out the target with a house deposit calculator.
• Overpay your existing mortgage. Every pound off the balance lowers the loan side of the ratio. Over a few years this can move you down a band before you remortgage. See the impact with a mortgage overpayment calculator.
• Let rising value do the work. If property prices in your area have risen since you bought, your equity grows even if you have not overpaid, pulling your LTV down. A fresh valuation at remortgage time can reveal you have crossed a band.
• Add value through improvements. A well-judged extension or renovation can lift the surveyed value, though the cost rarely returns pound for pound, so do the sums first.

When you remortgage, recalculate your LTV against the lender's current valuation before you apply. If you are close to a band boundary, it can be worth paying the small balance needed to drop under it, or pushing the application until a higher valuation lands. Test the new rate against your current one with a remortgage calculator to see whether switching is worth it.

Common mistakes to watch

• Using the asking price, not the valuation. Lenders lend against their own surveyor's figure. If the valuation comes in under the price you agreed, your real LTV rises and you may slip into a more expensive band, or need a bigger deposit to complete.
• Forgetting fees eat your deposit. Stamp duty, legal costs and a survey all come out of your cash. Budget for them separately, or you may find the deposit you thought reached 85% actually only stretches to 90% once the bills are paid.
• Ignoring the band cliff edge. Landing at 90.4% LTV rounds into the 91-95% band with most lenders. A small extra payment to get to 89.9% can move you a whole tier and save real money over the deal.
• Assuming a low LTV guarantees approval. LTV decides your rate band, but lenders still test affordability against your income and outgoings. A 60% LTV will not rescue an application that fails the income multiple or credit check.
• Overlooking negative equity risk on high LTV. If you buy at 95% and prices fall 10%, you owe more than the home is worth. That traps you on your lender's rate because you cannot remortgage, so a thin deposit carries a real cost if the market dips.
• Confusing LTV with affordability. A low ratio looks reassuring, but it tells you nothing about whether the monthly payment fits your budget. Check the payment itself with a mortgage calculator before you commit.

Loan to value is the same calculation everywhere in the UK, so there is no England, Scotland, Wales or Northern Ireland split for the ratio itself. What does differ by nation is the property tax you pay on top of your deposit: Stamp Duty Land Tax in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, and Land Transaction Tax in Wales. Each has its own bands and its own treatment of first-time buyers and additional properties, so factor the right one into your total cash needed.

These figures are estimates for guidance only and not personal tax or financial advice. Your actual rate, eligibility and valuation depend on your circumstances and the lender's assessment.

Related calculators

To plan the full picture, size up the cash you need with the house deposit calculator, work out the monthly cost on any deal with the mortgage calculator, and if you are remortgaging, compare your current rate against a new one using the remortgage calculator.