Tóm tắt
Loan-to-Value (LTV) is the size of your mortgage expressed as a percentage of your property’s value. It is the single most important factor in determining what mortgage rates you can access. A lower LTV means more equity, lower risk for the lender, and better rates for you. UK lenders price mortgages in LTV bands — crossing a threshold (e.g., dropping from 80% to 75%) can unlock meaningfully cheaper deals.
Cách hoạt động
LTV tells the lender how much of the property is covered by the loan versus your own equity:
- 60% LTV = you own 40% outright, the lender finances 60%
- 95% LTV = you own just 5%, the lender finances 95%
Lenders care about LTV because it determines their risk exposure. If house prices fall and you default, the lender needs to recover the loan by selling the property. Higher LTV means less buffer against a price drop.
UK LTV bands and what they mean
| LTV band | Deposit/equity | Rate impact |
|---|---|---|
| Under 60% | 40%+ | Best rates available — lowest risk |
| 60–75% | 25–40% | Excellent rates — strong equity position |
| 75–80% | 20–25% | Good rates — qualifies for most products |
| 80–90% | 10–20% | Standard rates — moderate risk |
| 90–95% | 5–10% | Higher rates, limited choice — high risk |
| Over 95% | Under 5% | Very few lenders — near maximum risk |
The rate difference between 60% and 95% LTV is typically 1.0–1.5 percentage points on a 2-year fixed deal. On a £200,000 mortgage, that’s roughly £100–£150 per month.
Maximum LTV
Most UK lenders cap residential mortgages at 95% LTV (5% minimum deposit). Buy-to-let mortgages typically require 25% deposit (75% LTV maximum).
Negative equity
If property prices fall enough that your mortgage exceeds your property’s value, you have negative equity (LTV over 100%). This means you can’t remortgage, can’t sell without a shortfall, and are locked into your current deal. High-LTV mortgages (90–95%) are most vulnerable.
Công thức
Where
Ví dụ minh họa
£300,000 property with £240,000 mortgage
Calculate LTV
= 80.0% LTV
Calculate equity
= £60,000 equity (20.0%)
Determine band
= Standard rates — moderate risk
Reverse lookup: what property value gives 75% LTV?
= £320,000 — property needs to be worth this for the 60–75% band
Result
You're at 80% LTV with £60,000 equity. If the property value rises to £320,000 (or you pay the balance down to £225,000), you'd reach 75% LTV and unlock better rates.
Giải thích đầu vào
- Property value — the current market value of the property (not what you paid for it). Use a recent valuation or online estimate.
- Mortgage balance — the outstanding amount you owe. Check your latest mortgage statement.
Giải thích đầu ra
- LTV percentage — loan as a percentage of property value
- LTV band — which pricing tier you fall into
- Equity amount — how much of the property you own outright (£)
- Equity percentage — equity as a percentage of property value
- Reverse lookup — for a given mortgage balance, what property values correspond to key LTV thresholds (60%, 75%, 80%, 90%, 95%)
Giả định và hạn chế
- The calculator uses the current property value, not the original purchase price. Property values change over time — use a recent valuation or estimate.
- LTV bands and their rate implications are approximate and based on typical UK lender thresholds. Individual lenders may use slightly different thresholds (e.g., 70% instead of 75%).
- The calculator does not factor in second charges or other debts secured against the property. Lenders consider all secured lending when assessing LTV.
- Buy-to-let and commercial properties have different LTV limits and band pricing — this calculator is designed for residential mortgages.
- Negative equity is shown as LTV > 100% but the calculator does not model the consequences (inability to remortgage, shortfall on sale, etc.).
- Property valuation is inherently uncertain — the calculator only works with the value you provide.
Xác minh
| Test case | Property value | Mortgage | Expected LTV | Band |
|---|---|---|---|---|
| Low LTV | £300,000 | £150,000 | 50.0% | Under 60% |
| Good equity | £300,000 | £180,000 | 60.0% | 60–75% |
| Threshold | £300,000 | £225,000 | 75.0% | 75–80% |
| Standard | £300,000 | £240,000 | 80.0% | 80–90% |
| High LTV | £300,000 | £285,000 | 95.0% | Over 95% |
Accounting identity: LTV + Equity % = 100%. Mortgage Balance + Equity = Property Value.
Sources
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