LTV is three letters that follow you through every stage of your mortgage journey. It determines which deals you can access, what rate you pay, and how much negotiating power you have when you remortgage.
The formula is simple
LTV = (Loan Amount ÷ Property Value) × 100
Buy a £250,000 house with a £25,000 deposit — you're borrowing £225,000. That's 90% LTV. Save another £12,500 and get to 85% LTV. The rate difference between those two can be 0.3–0.5%.
On a £225,000 mortgage over 25 years, 0.4% lower rate saves you roughly £12,000 in interest. That's real money from a slightly bigger deposit.
The LTV thresholds that matter
Lenders don't offer a different rate for every percentage point. They work in bands. Cross a threshold and you unlock better pricing:
- 95% LTV — minimum for most first-time buyers. Limited deals, highest rates.
- 90% LTV — more choice, meaningfully better rates.
- 85% LTV — another step down in rate.
- 80% LTV — solid mid-range pricing.
- 75% LTV — near the top tier of deals.
- 60% LTV — the best rates on the market. Almost no lender offers anything better below this.
Your LTV changes as you repay
Every mortgage payment reduces your balance. If your property value rises too, your LTV falls faster. When you remortgage, your new LTV is calculated on the current market value — not what you paid.
Someone who bought at 90% LTV five years ago may now be sitting at 70% LTV thanks to repayments and house price growth. That's a significantly better rate bracket at remortgage time.
Check where you land
Before you apply for anything, know your LTV. Use the mortgage calculator to see how your rate and repayments shift at different LTV bands — then decide whether it's worth stretching your deposit to cross the next threshold.