Work out your loan to value ratio with our handy mortgage loan to value calculator, helping you to get the best mortgage deal available to you.
The loan to value ratio (LTV) is essentially the size of your mortgage in relation to the value of the property you’re buying or remortgaging.
The LTV is expressed as a percentage - so if, for example, a lender offers you a mortgage deal with a maximum 80% LTV, that means they’ll lend you up to 80% of the property value.
So, if you plan to buy a property at £100,000 and you have a 10% deposit, you’ll need to find a 90% LTV mortgage. Loan to value mortgage rates typically range from 50% up to 95%, so there are a variety of deals out there to suit most prospective homebuyers.
Published 20 July 2022
The loan to value ratio has an impact on the rates you’ll be able to get. If you put down a larger deposit or build up equity in your property over time you’ll need to borrow less from your mortgage lender, meaning you’ll have a lower LTV. This will mean you’ll qualify for lower loan to value mortgage rates, which will typically be more competitive.
To find out which mortgage deals you’re likely to be eligible for, you’ll need to work out your LTV. To do that, you’ll need to establish what percentage of the property value you need to borrow, and how much you can cover with your deposit.
You can do this by dividing your mortgage amount by the value of the property you want to buy, then multiplying that by 100. The resulting number is your loan to value ratio, shown as a percentage.
For example, if you’re buying a property worth £250,000 and have a deposit of £50,000, you’ll need to get a mortgage of £200,000. To find out your LTV, simply divide £200,000 by £250,000 and then multiply by 100. This gives you an LTV of 80%, so you should look for mortgage deals that are available up to 80% LTV.
Of course, to make it easier, you can just use our loan to value mortgage calculator above. All you need to do is enter your deposit amount and the value of your property, and we’ll calculate the loan to value for you.
The lower your mortgage loan to value, the wider your choice of mortgages will be.
Lenders usually offer their most competitive mortgage deals to borrowers they consider lower risk, which means homebuyers with a big deposit to put down, or those who own a substantial amount of equity in their property if remortgaging to a new deal.
That means that, if you have a 50% deposit on a new home, or an equivalent amount of equity if you’re remortgaging, you’ll qualify for a 50% loan to value mortgage. Those who are able to get a 50% LTV mortgage will benefit from better rates and a greater choice of options than someone with a smaller deposit or equity.
Similarly, if your LTV is 75% you’ll usually have a wide range of competitive deals to choose from, as lenders will still consider you less likely to default on your mortgage than someone with a smaller deposit or equity.
If you have additional savings, then it might be worth considering using these to increase your deposit, and therefore reducing your mortgage amount.
By doing this, you may be able to get a better loan to value mortgage, saving you money in the long run. There’s no one-size-fits-all when it comes to mortgages, so you’ll have to weigh up the pros and cons to see whether this is the right thing for you to do. You should always ensure you have some savings available for use in the event of an emergency.
We know that you’ll get a better loan to value mortgage deal if you have a big deposit to put down. But what if you only have a 5% or 10% deposit? In that case, you’ll be limited to 95% or 90% LTV mortgage deals.
The good news is that, in recent years, lenders have launched more high LTV deals - although it’s important to note that the rates offered will still typically be higher than the rates for lower LTV mortgages.
If you have a smaller deposit and need a 90% or 95% mortgage, we’re here to help. Get in touch with the expert team at L&C, and we’ll talk you through the different options available to you. As a free, whole of market mortgage broker, we’re here to help you find the best deals for your circumstances - we also have access to deals not available on the open market.
And what if you’re buying a property to rent out? Can you get a good loan to value mortgage rate?
You’ll usually find LTVs on Buy to Let mortgages are lower than on residential mortgages, as they represent a higher risk to lenders. The maximum amount you’re likely to be able to borrow on a BTL mortgage is 75% to 85% of the property value. You can use our buy to let mortgage calculator to find out what deals you qualify for and how much they’re likely to cost you.
Our mortgage loan to value calculator is a good start to work out how much you can borrow, but if you’re ready to find out more, get in touch with L&C. As a whole of market mortgage broker, we offer free mortgage advice to help you secure the right mortgage for your personal circumstances.
In general, anything under 80% is considered to be a good LTV. Over 80% is considered to be a higher LTV, and whilst there are still mortgages available for 80%, 85%, 90% and even 95% LTVs, you’ll have a smaller pool to choose from, and you may have to pay more in the long run. If you have a small deposit or level of equity in your property, it may be worth saving up more before making your mortgage application, so you have a wider choice of lenders and mortgage deals to choose from. Either way, we can help you to find the best offers available for your personal circumstances.
You can easily work out your LTV by dividing your mortgage amount by the value of your property, then multiplying it by 100. So, if you’re buying a £300,000 property and have a £60,000 deposit, you’ll need to borrow £240,000. You’ll then divide £240,000 by £300,000 and multiply that by 100, giving you an LTV of 80%. Or you could cut out the maths and use our handy calculator to work out your LTV in seconds!
If possible, it’s better to have a low LTV. A 70% LTV compared to an 80% one, for example, will open up more mortgage deals for you as it’s less risky for lenders. With a lower LTV, it’s likely that you’ll be able to get better mortgage rates, and you’ll have more equity in your home. But don’t worry if you only have a 5% or 10% deposit - there are still mortgage lenders out there for you. Speak to the team here at L&C and we’ll search the market for you to find the best deals possible.
It’s simple to work out your LTV when remortgaging your home. You just need to divide the amount you still owe on your mortgage by your home’s current value, then multiply that figure by 100.
We've got lots of useful mortgage calculators to help you find out more about how much you can borrow, what it will cost, what fees will be involved and what else you should consider.