Free Loan to Value Calculator (LTV): Results in Seconds
LTV or Loan to value is a term you'll often hear when buying or investing in property. It's one of the most important numbers that determines not just whether you'll get a mortgage, but what interest rate you'll pay. Use our calculator below to find your LTV in seconds, then read on to understand exactly what your result means.
Article updated: October 2025
Free Loan to Value Calculator
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by Robert Jones, Founder of Property Investments UK
With two decades in UK property, Rob has been investing in buy-to-let since 2005, and uses property data to develop tools for property market analysis.
How to Calculate Your Loan-to-Value (LTV)
The difference between a 75% LTV and an 85% LTV mortgage can cost you thousands of pounds over the mortgage term. Whether you're looking at starting a property business or buying your first home, understanding your LTV ratio is crucial.
In simple terms, loan to value is determined by subtracting your deposit from the property's value to find the amount you need to borrow, dividing that by the total property value, and then multiplying by 100 to obtain a percentage.
Use our Loan to Value Calculator above to quickly work out your LTV ratio and better understand how it might affect your mortgage options.
The Loan to Value Formula Explained
The loan-to-value formula is straightforward:
Loan to Value = (Mortgage Amount ÷ Property Value) × 100
Or, to put it another way:
LTV = ((Property Value - Deposit) ÷ Property Value) × 100
Both formulas give you the same result – the percentage of the property's value that you're borrowing.
LTV Calculation Examples
Example 1: Residential Property Purchase
Imagine you're buying a property worth £200,000 and have a £50,000 deposit. Here's how to calculate your loan to value ratio:
- Property value: £200,000
- Deposit: £50,000
- Mortgage required: £200,000 - £50,000 = £150,000
- Loan to Value calculation: (£150,000 ÷ £200,000) × 100 = 75% LTV
With a 75% loan to value ratio, you'd typically access much more competitive mortgage rates and have a good range of lender options.
Example 2: Buy-to-Let Property
For a buy-to-let investment property worth £250,000 with a £62,500 deposit:
- Property value: £250,000
- Deposit: £62,500
- Mortgage required: £250,000 - £62,500 = £187,500
- Loan to Value calculation: (£187,500 ÷ £250,000) × 100 = 75% LTV
For buy-to-let mortgages, 75% LTV is typically the maximum most lenders offer, meaning you'll need at least a 25% deposit. You should also consider the rental yield to ensure the property generates sufficient income to cover mortgage payments.
Purchase Price vs. Valuation: Which Matters?
Most lenders base your loan to value ratio on the lower of two figures:
- The purchase price you've agreed to pay
- The lender's own valuation of the property
This protects the lender if you're overpaying for a property. For example, if you get a property valuation survey and you agree to pay £200,000 but the lender values it at £190,000, they'll calculate your LTV on £190,000 – meaning you'd need a larger deposit to achieve your target loan to value ratio.
When remortgaging, lenders use their current valuation of your property, which could be higher or lower than your original purchase price. This is why some homeowners can reduce their loan to value over time through property price growth, even without paying down their mortgage.
Why Loan-to-Value Matters
Understanding your loan to value ratio isn't just about getting approved for a mortgage - it directly impacts how much you'll pay in interest and which lenders will work with you. The difference between a 60% LTV and a 90% LTV mortgage can mean thousands of pounds in additional costs over the term of your loan.
How Loan to Value Affects Your Mortgage Rate
Banks and building societies will normally only lend a proportion of what a property is worth. The relationship between what a property is worth and what will be lent to buy it is what the loan to value ratio represents.
Lenders typically offer their mortgage products in LTV "bands" – and the interest rate you'll pay jumps significantly as you move between these bands:
- 60% LTV or below: Access to the very best mortgage rates available
- 75% LTV: Competitive rates with good product choice
- 85% LTV: Moderate rates, more limited options
- 90% LTV: Higher rates, fewer lenders
- 95% LTV: Premium rates, specialist lenders only
For example, in the current market, the difference between a 60% LTV and 90% LTV mortgage rate could be 1-2% per year. On a £200,000 mortgage over 25 years, that's potentially over £50,000 in extra interest payments.
Why Lenders Care About LTV: The Risk Factor
From a lender's perspective, loan to value is fundamentally about risk management. Here's their thinking:
Lower LTV = Lower Risk: If you have a 40% deposit (60% LTV), the property value would need to fall by more than 40% before the lender faces any loss in a repossession scenario. This makes low LTV loans very safe for lenders, which is why they offer their best rates.
Higher LTV = Higher Risk: With a 5% deposit (95% LTV), even a small drop in property values could mean the lender can't recover their money if you default. They offset this risk by charging higher interest rates.
Lenders also know that borrowers with high LTV mortgages are often stretching their finances, making them statistically more likely to miss payments. This is particularly relevant when considering raising property finance for investment purposes.
Different LTV Requirements by Property Type
Not all properties are treated equally when it comes to loan to value ratios. Lenders apply different maximum LTV limits depending on what you're buying:
Residential Properties (Owner-Occupier)
- Maximum LTV: Typically 95% (though 90% is more common)
- Typical deposit: 5-10% minimum
- Best rates: Usually available at 60% LTV or below
Buy-to-Let Properties
- Maximum LTV: Usually 75% (some specialist lenders offer 80%)
- Typical deposit: 25% minimum
- Additional requirement: Rental income must typically cover 125-145% of mortgage payments
The lower maximum LTV for buy-to-let reflects the additional risks lenders associate with investment properties. When calculating whether a buy-to-let makes financial sense, you'll need to consider both your LTV and your rental income requirements.
HMO (House in Multiple Occupation) Properties
- Maximum LTV: Typically 70-75%
- Typical deposit: 25-30% minimum
- Additional requirements: HMO license, higher rental coverage ratios
- Fewer lenders: Specialist products only
HMOs require the largest deposits and have the strictest lending criteria. However, they can also generate the highest returns when managed correctly. Before investing in an HMO, make sure you understand the complete guide to investing in HMOs, including licensing requirements and management considerations.
Holiday Lets and Airbnb Properties
- Maximum LTV: Often 60-75%, depending on lender
- Typical deposit: 25-40% minimum
- Mortgage type: May require commercial mortgage or specialist residential lender
- Additional complexity: Income assessment based on projected bookings, seasonal variations
Holiday lets can generate higher than average rental returns but often require substantial deposits and a specialist strategy. Many lenders treat holiday lets as commercial ventures, requiring commercial mortgages with higher deposit requirements. If you're considering this route, our partners have Airbnb properties for sale.
New Build Properties
- Maximum LTV: Some lenders cap at 85% for new builds
- Valuation consideration: Lenders often value new builds conservatively
- Why it matters: New builds may require larger deposits than equivalent resale properties
Understanding these different LTV requirements is crucial when building your investment property checklist and planning your deposit needs.
How to Improve Your Loan-to-Value Ratio
Increasing Your Deposit
The most direct way to improve your LTV is to increase your deposit. Here's how the numbers work in practice:
Example: Dropping from 80% to 75% LTV
You're buying a £200,000 property with a £40,000 deposit (80% LTV). To reach 75% LTV, you need:
- Target mortgage: £200,000 × 75% = £150,000
- Required deposit: £200,000 - £150,000 = £50,000
- Additional deposit needed: £50,000 - £40,000 = £10,000
An additional £10,000 deposit can affect both the interest rates available to you and your likelihood of approval. For buy-to-let properties, 75% LTV is typically the maximum most lenders offer, meaning a 25% deposit is usually required. We recommend consulting with a qualified financial adviser and mortgage broker to see the best product for you.
Using Capital Growth to Reduce LTV
Your loan to value can improve without you paying anything extra. Here's how:
You bought a property for £200,000 with a £50,000 deposit (75% LTV, £150,000 mortgage). After three years, the property is now worth £220,000, but your mortgage is still £150,000 (assuming interest-only):
- New LTV: (£150,000 ÷ £220,000) × 100 = 68.2% LTV
- You've dropped from 75% to 68% LTV without paying a penny extra
- This gives you access to better rates when you remortgage
This is particularly powerful in areas experiencing strong capital growth. Your LTV naturally improves as property values rise, even if you're on an interest-only mortgage.
Frequently Asked Questions About Loan to Value
Is a lower Loan to Value (LTV) always better?
Not always. While a lower loan to value gives you access to better mortgage rates, it's not automatically the best option for every buyer. When lower LTV may be beneficial: Some borrowers at 76% LTV find that reaching 75% LTV with a small additional deposit provides access to better interest rates. The rate difference between 75% and 80% LTV can be 0.3-0.5%, representing hundreds per year in interest costs. Whether this is worthwhile depends on your individual circumstances. We recommend to consult a qualified financial adviser to see which is best for you.
What does 60% Loan to Value (LTV) mean in practice?
A 60% loan to value means you're borrowing 60% of the property's value and providing a 40% deposit. On a £200,000 property: Mortgage £120,000 (60%), Deposit £80,000 (40%). On a £300,000 property: Mortgage £180,000 (60%), Deposit £120,000 (40%). At 60% LTV, you'll likely be able to access better mortgage rates. Most lenders reserve their lowest rates for 60% LTV and below because there is then substantial equity, making it potentially lower risk for them.
Can I get a 95% LTV buy-to-let mortgage?
This is very unlikely. The maximum loan to value when buying your first rental property is typically 75% LTV (requiring a 25% deposit), with some specialist lenders offering up to 80% LTV in exceptional circumstances. Buy-to-let mortgages require larger deposits than residential mortgages because investment properties are considered higher risk than owner-occupied homes, rental income can be unpredictable (void periods, tenant issues), and lenders need larger equity buffers to protect against property value falls.
How does Loan to Value (LTV) affect my monthly payments?
Your loan to value affects monthly payments in two ways: the loan amount itself and the interest rate you'll pay. The more finance you take (therefore a higher loan to value), the increased costs you will experience. Both because you're borrowing more and because you're paying a higher interest rate on that larger loan. Over 25 years this can be significant. It is why it is very important to always check rates and the best products with your mortgage broker before you commit to a property purchase.
Is Loan to Value (LTV) based on purchase price or valuation?
Lenders often use the lower of the purchase price or their own valuation. Example 1 (Purchase price lower): You're buying a property for £180,000, but the lender values it at £200,000. They'll calculate LTV based on £180,000 (the purchase price). Example 2 (Valuation lower): You're buying a property for £200,000, but the lender values it at £185,000. They'll calculate LTV based on £185,000 (their valuation), meaning you'll need a larger deposit than you planned. This protects lenders from overpayment. If you're buying below market value through strategies like BMV property deals, the lender will often still only lend based on what you're actually paying, not the higher market value. When remortgaging: Lenders use their current valuation, as there's no purchase price. This is why natural property price growth can improve your LTV even if you haven't paid down your mortgage.
Does Loan to Value (LTV) matter when remortgaging?
Yes, LTV is crucial when remortgaging. Your LTV determines which mortgage products you can access and what rates you'll pay. How your LTV changes during a mortgage term: You bought a property for £200,000 with £50,000 deposit (75% LTV). After 5 years, property now worth £230,000, mortgage paid down to £140,000, giving you a new LTV of 60.9% (£140,000 ÷ £230,000 × 100). You've moved from 75% LTV to 60% LTV without doing anything dramatic. When you remortgage, you'll now access much better rates than your original mortgage. Why this matters. Many homeowners and landlords stay on expensive variable rates after their fixed term ends because they don't realise their improved LTV qualifies them for better deals. Check your LTV before every remortgage.
Professional Advice Disclaimer
The information in this guide is intended to help you understand loan-to-value calculations and how LTV affects mortgage options. However, every individual's financial situation is different. Property investment involves significant financial risk, and your capital is at risk. Past performance and examples shown are not reliable indicators of future results. We strongly recommend consulting with FCA-registered financial advisers, qualified mortgage brokers, and tax specialists before making any property purchase or mortgage decisions.