Loan-to-value (LTV) is the ratio of your mortgage to the property's value, expressed as a percentage. For example, borrowing £180,000 on a £200,000 property gives a 90% LTV. Lower LTV ratios unlock better interest rates because the lender's risk is reduced.
What Is Loan-to-Value (LTV)?
Loan-to-value (LTV) is a simple ratio that compares how much you're borrowing to the property's value. It's expressed as a percentage:
LTV = (Mortgage Amount ÷ Property Value) × 100
For example, if you're buying a £250,000 property with a £25,000 deposit, you need a £225,000 mortgage. Your LTV is 90% (225,000 ÷ 250,000 × 100).
The remaining percentage — the equity — is your stake in the property. At 90% LTV, you have 10% equity.
Why LTV Matters So Much
LTV is one of the biggest factors determining your mortgage interest rate. The lower your LTV, the less risk the lender takes — and the better rate they'll offer you.
Here's a simplified example of how rates change at different LTV bands (illustrative, March 2026):
| LTV | Deposit (on £250k) | Typical 5yr Fixed Rate |
|---|---|---|
| 95% | £12,500 | 5.0–5.5% |
| 90% | £25,000 | 4.4–4.8% |
| 85% | £37,500 | 4.2–4.5% |
| 80% | £50,000 | 4.0–4.3% |
| 75% | £62,500 | 3.8–4.1% |
| 60% | £100,000 | 3.6–3.9% |
The difference between 95% LTV and 75% LTV can be over 1% in interest rate — on a £200,000 mortgage, that's approximately £2,000+ per year in savings. Check our guide on what counts as a good rate at different LTV bands.
LTV Bands Explained
- 95% LTV: The maximum most mainstream lenders offer. Rates are the highest. Ideal for first-time buyers who can't save a larger deposit.
- 90% LTV: A significant rate improvement over 95%. This is where the widest range of products become available.
- 85% LTV: Often overlooked but can offer noticeably better rates than 90%.
- 80% LTV: Another major pricing threshold. The "sweet spot" for many borrowers.
- 75% LTV: Required for most buy-to-let mortgages. Residential rates are very competitive here.
- 60% LTV and below: Access to the competitive rates on the market. Common for remortgagors who've built significant equity.
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How to Reduce Your LTV
- Save a bigger deposit: Every extra 5% deposit drops you to a better LTV band. See our deposit guide.
- Make overpayments: Most mortgages allow 10% overpayments per year. This directly reduces your LTV for when you remortgage.
- Property price appreciation: If your property increases in value, your LTV drops automatically — even without extra payments.
- Buy below your maximum: Buying a cheaper property with the same deposit gives you a lower LTV and better rate.
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Understanding your LTV and how to optimise it can save you thousands. Our advisers offering free initial advice will calculate your exact LTV and find suitable deals available for your situation.
Frequently Asked Questions
- What does 90% LTV mean?
- It means you're borrowing 90% of the property's value and putting down a 10% deposit. On a £200,000 property, that's a £180,000 mortgage with a £20,000 deposit.
- What LTV do I need for the best mortgage rates?
- The most competitive rates are typically available at 60% LTV and below. However, significant rate improvements occur at each 5% band — 90%, 85%, 80%, 75%.
- Can I get a 100% LTV mortgage?
- 100% mortgages (no deposit) are extremely rare. Some guarantor mortgages effectively offer 100% LTV but require a family member to provide security.
- How does LTV affect remortgaging?
- When you remortgage, your LTV is recalculated based on your current balance and the property's current value. If your home has risen in value or you've overpaid, your LTV may have improved, giving you access to better rates.
Sources & References
- Loan-to-value explained — MoneyHelper (FCA)
- UK House Price Index — HM Land Registry / ONS
- Bank of England — mortgage market data — Bank of England
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