How LTV is calculated
The loan-to-value ratio compares the size of your mortgage with the value of the property you are buying:
LTV (%) = (Mortgage amount ÷ Property value) × 100
You set your LTV with your deposit: a bigger deposit means a smaller mortgage, which means a lower LTV. On a £300,000 home, a £60,000 deposit leaves a £240,000 mortgage — exactly 80% LTV.
What LTV means for your rate and payment
Lenders price risk by LTV: the more you borrow relative to the property’s value, the more they charge. 90% and 95% LTV mortgages are available, but they tend to carry higher rates. As you move below 90%, 85%, 80% and 75%, rates generally improve — the exact thresholds vary by lender and change over time.
| Deposit | Mortgage | LTV | Monthly payment (5% illustrative) |
|---|---|---|---|
| £30,000 (10%) | £270,000 | 90% | £1,578 |
| £45,000 (15%) | £255,000 | 85% | £1,491 |
| £60,000 (20%) | £240,000 | 80% | £1,403 |
| £75,000 (25%) | £225,000 | 75% | £1,315 |
| £120,000 (40%) | £180,000 | 60% | £1,052 |
Illustrative only — 5% p.a. constant, 25-year repayment term, £300,000 property. Actual rates by LTV tier change frequently and vary by lender.
The monthly payment falls for two reasons: a smaller loan, and (usually) a better rate. The rate effect matters too — two buyers with the same loan amount can pay different rates purely because of their LTV band.
Common LTV bands in the UK
While every lender sets its own tiers, most UK products are grouped around familiar bands: 95% (5% deposit), 90% (10%), 85% (15%), 80% (20%), 75% (25%), 70% (30%) and 60% (40%). Crossing a band — say from 82% to 78% — can open access to a cheaper tier.
If you are close to a band boundary, it can be worth checking what happens with a slightly larger deposit before you complete. Lenders generally base LTV on the lower of the purchase price and the valuation, so a low valuation can push your LTV up.
How to lower your LTV
- Save a bigger deposit — even an extra 5% of the price can move you into a better band.
- Overpay early — overpaying reduces the balance and your LTV, which matters when you remortgage.
- Wait for the valuation — a higher valuation on the same loan lowers your LTV.
Overpaying is usually capped at 10% of the balance per year without an early-repayment charge — see our overpayment guide and the overpayment calculator for the numbers.
LTV and remortgaging
Your LTV is not fixed for the life of the mortgage. As you repay capital and as property values change, your LTV moves — which is why remortgaging at the end of a fixed deal can unlock a better rate. The balance is yours; the property value is the current valuation.
See how much you could borrow and what your LTV looks like with the UK mortgage calculator, which shows your LTV and deposit percentage instantly as you change the numbers.
Frequently asked questions
Is 80% LTV good?
80% LTV (a 20% deposit) is a common sweet spot for UK buyers: it is below the 85% and 90% tiers, so rates are typically more competitive, and it is achievable for many first-time buyers. Whether it is "good" depends on the rates available at that band when you apply.
What does 90% LTV mean?
A 90% LTV mortgage means you are borrowing 90% of the property value and putting down a 10% deposit. On a £300,000 home that is a £270,000 mortgage with a £30,000 deposit.
Can I get a 95% LTV mortgage?
Yes — 95% LTV (a 5% deposit) mortgages are available in the UK, and some lenders offer 100% LTV products, though availability and rates vary. Higher LTV mortgages carry higher rates and often require a stronger affordability check.
Does LTV affect my mortgage rate?
Yes. Lenders generally charge higher rates at higher LTVs to compensate for the greater risk of a small deposit. The relationship is not linear — rates typically improve in steps as you cross bands such as 90%, 85%, 80% and 75%.
How is LTV calculated on a remortgage?
On a remortgage, LTV is the outstanding balance divided by the current property valuation. If you have overpaid or values have risen, your LTV will be lower than when you bought.
Educational guide only — not financial advice. Rates change frequently; always check the latest lender offers and official guidance.