Finance glossary
Loan to Value — LTV
Also known as: LTV
In simple terms
Loan to value is how much you are borrowing compared with what the property is worth, shown as a percentage. Borrow £180,000 against a £200,000 home and your LTV is 90%.
On this page
What does loan to value mean?
Loan to value (LTV) compares the amount you are borrowing on a mortgage with the value of the property. It is written as a percentage: the higher the percentage, the more of the property’s value is covered by the loan rather than by your own money.
Your deposit is the other side of the same coin. A bigger deposit means a smaller loan relative to the value, so a lower LTV — and lenders generally reserve their best rates for lower LTVs.
How loan to value works
LTV is worked out by dividing the mortgage amount by the property’s value and multiplying by 100. Lenders group deals into bands — often 60%, 75%, 80%, 90% and 95% — and the interest rate usually improves each time you drop into a lower band.
The value used is the lender’s valuation, which can differ from the price you agree. When you remortgage, LTV is recalculated on the current value and your reduced balance, so rising prices or years of repayments can move you into a cheaper band.
How could this affect me?
A lower LTV typically unlocks lower interest rates and a wider choice of lenders, so saving a little more deposit to cross a band boundary can noticeably cut your monthly payment. A high LTV, by contrast, means fewer deals and a higher rate.
LTV also matters for risk: if prices fall, a high-LTV borrower can slip into negative equity — owing more than the home is worth — much more easily than someone who started with a large deposit.
Example
Buying a £200,000 property with a £20,000 deposit:
| Property value | £200,000 |
|---|---|
| Deposit | £20,000 |
| Mortgage needed | £180,000 |
| Loan to value (LTV) | 90% |
Adding £10,000 more deposit would cut the loan to £170,000 — an 85% LTV, often a cheaper rate band. Figures are illustrative.
Things to watch out for
- The lender’s valuation, not the price you agreed, sets your LTV — a “down-valuation” can push you into a worse band.
- Crossing a band boundary (say from 91% to 90%) can change your rate, so a slightly bigger deposit sometimes pays for itself.
- A high LTV leaves little cushion — a fall in prices can quickly mean negative equity.
- Fees added to the loan increase the amount borrowed and can nudge your LTV up.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, How much deposit do you need for a mortgage? (opens in a new tab). Accessed 22 Aug 2026.
- Bank of England, Mortgage lending and loan to value ratios (opens in a new tab). Accessed 22 Aug 2026.