Loan to Value (LTV)

The ratio between the value of a property and the mortgage or loan.

Loan to Value (LTV) is a percentage that indicates the value of the mortgage or loan in relation to the size of your deposit. Some LTV loans will require the borrower to purchase mortgage insurance too, to help offset the risk to the lender. Ultimately the LTV percentage helps lenders to determine the amount of risk they are exposing themselves to.

High or low?

A high LTV often represents a greater risk for the lender which will usually lead to less competitive interest rates than someone with a low LTV. In order to lower your LTV, you'll need to provide more of your own finances towards the property.

Practical Application Example

“ If a property is worth £250,000, for instance, and the prospective purchaser requires a mortgage of £200,000 due to only having £50,000 in their bank account to use as a deposit, the loan to value ratio would be 80%. This percentage refers to the proportion of the total property cost that is covered by the mortgage, with the deposit covering the remaining 20%. ”