What is Loan to Value?
Loan to Value (LTV) is the percentage of a property's value that you're borrowing. If you're buying a £300,000 property with a £60,000 deposit, you need a £240,000 mortgage. £240,000 is 80% of £300,000, so your LTV is 80%. The remaining 20% is your equity.
For remortgages, LTV is calculated using your outstanding mortgage balance against your property's current value. If you owe £180,000 on a property now worth £300,000, your LTV is 60%.
Why LTV Matters
LTV is one of the most important factors affecting your mortgage rate. Lower LTVs generally mean better rates because there's more equity acting as a buffer for the lender. If property values fall, lower LTV borrowers are less likely to end up in negative equity.
Rate improvements often occur at LTV thresholds: 95%, 90%, 85%, 80%, 75%, 60%. Crossing into a lower band can make a meaningful difference to your rate. Even small LTV improvements can unlock better deals.
How to Calculate Your LTV
Divide your mortgage amount by your property value, then multiply by 100 to get a percentage. For remortgaging, you'll need a current valuation - either a professional valuation or an estimate from property websites like Zoopla or Rightmove (lenders will conduct their own valuation during the process).
Example: £150,000 mortgage ÷ £250,000 property value = 0.6 × 100 = 60% LTV.
Improving Your LTV
Your LTV improves over time as you pay down your mortgage and if your property value increases. Making overpayments (where allowed without charge) can accelerate this. A rising property market naturally reduces LTV even without extra payments.
Before remortgaging, calculate whether a small lump sum payment could push you into a better LTV band. The rate improvement might more than justify using savings for this purpose.
High LTV Mortgages
Mortgages above 90% LTV are considered high risk by lenders, resulting in higher rates and more limited options. However, products are available up to 95% LTV from most mainstream lenders, making homeownership possible with smaller deposits.
If you're currently on a high LTV, your property may have appreciated since purchase, naturally improving your LTV position. This can unlock significantly better rates when you remortgage.