Loan-to-Value (LTV) Calculator
Last updated: 27 June 2026
Reviewed by Gavin Meiring, Lead research and primary author · Doctoral Candidate (Corporate Governance) · Research and drafting assisted by AI
- Loan-to-value is one of the strongest drivers of mortgage pricing: the higher the LTV, the riskier the loan and the higher the interest rate.
- In the US, borrowers taking loans above 80% LTV are usually required to buy private mortgage insurance (PMI) to protect the lender.
- Before the 2008 financial crisis, some lenders offered 100% and even 125% LTV mortgages — Britain's Northern Rock famously lent more than a home was worth, contributing to its collapse and the first run on a UK bank in 150 years.
LTV Calculator
A loan-to-value (LTV) calculator helps you understand how much of a property's value you are borrowing. It is used by homebuyers, investors, and lenders to assess mortgage risk and determine eligibility for different rate bands.
How to Use the LTV Calculator
- Enter the property value or purchase price.
- Enter the deposit or equity you are putting in.
- The calculator subtracts your deposit from the property value to find the loan amount.
- It then divides the loan by the property value and multiplies by 100 to give your LTV percentage.
- Use the result to compare mortgage products, as most lenders offer better rates below certain LTV thresholds.
The Formula
LTV (%) = (Loan Amount / Property Value) x 100
Loan Amount is the total mortgage you need, which equals the property value minus your deposit. Property Value is the purchase price or current market valuation. The result is expressed as a percentage. A lower LTV means you own a larger share of the property and typically qualifies you for better interest rates.
Real-World Example
You are buying a property worth £300,000 and have a £45,000 deposit.
Loan amount = £300,000 - £45,000 = £255,000
LTV = (£255,000 / £300,000) x 100 = 85%
An 85% LTV means you are borrowing 85% of the property's value. Many lenders price their products at 60%, 75%, 80%, 85%, and 90% LTV bands. At 85% you would be in a higher rate band than if you could stretch your deposit to reach 80%, which would give you an LTV of 80% and likely access to cheaper deals.
LTV Thresholds and Mortgage Rates
Lenders use LTV bands to price risk. The most competitive rates are typically available below 60% LTV, with each higher band attracting a premium. Common thresholds are 60%, 70%, 75%, 80%, 85%, and 90%. Lenders rarely offer residential mortgages above 95% LTV, and those that do charge significantly more. If you are close to a threshold, it is worth exploring whether a slightly larger deposit or a lower offer price could move you into the next band down and save money over the life of the loan.
Frequently Asked Questions
What is a good LTV ratio for a mortgage? Below 80% is generally considered favourable, as most lenders reserve their best rates for borrowers in this range. The very best deals are usually reserved for borrowers at 60% LTV or below.
Does LTV change over time? Yes. As you repay your mortgage and if your property increases in value, your LTV falls. Remortgaging at a lower LTV band can earn better rates and reduce your monthly payments.
Can LTV affect whether I get a mortgage at all? Yes. Most mainstream lenders cap lending at 90% or 95% LTV. Above these levels, the number of available products drops sharply and rates rise considerably.
Is LTV the same as equity? No, but they are related. Equity is the percentage of the property you own outright. LTV and equity always add up to 100%. If your LTV is 75%, you have 25% equity.
What the deposit does at each LTV band
Lenders price against a short list of LTV bands rather than a continuous scale, so the deposit matters most at the boundary between two of them. On a property valued at £300,000 the deposit, the loan and the gap to the next band down work out as follows.
| LTV band | Deposit needed | Deposit as a share of the price | Loan amount | Extra deposit to reach this band from the one above |
|---|---|---|---|---|
| 90% | £30,000 | 10% | £270,000 | £0, this is the entry row |
| 85% | £45,000 | 15% | £255,000 | £15,000 |
| 80% | £60,000 | 20% | £240,000 | £15,000 |
| 75% | £75,000 | 25% | £225,000 | £15,000 |
| 70% | £90,000 | 30% | £210,000 | £15,000 |
| 60% | £120,000 | 40% | £180,000 | £30,000 |
Each row is the property value minus the deposit, divided by the property value again. The 90% row needs £30,000, so the loan is £270,000, and £270,000 divided by £300,000 is 0.90. The same check holds on every row. The hop from 70% to 60% costs £30,000 rather than £15,000 because the published bands skip 65%, and that gap is the one buyers most often fail to plan for.
Two worked cases from the numbers a lender receives
The first case is the one in the example above. Property £300,000, deposit £45,000.
Loan = £300,000 - £45,000 = £255,000
LTV = £255,000 / £300,000 x 100 = 85.00%
The second case is the one that catches buyers between offer and completion. The price agreed is still £300,000 and the deposit is still £45,000, but the lender's valuer returns £280,000. The money the buyer has to find does not change, because the price does not change.
Loan needed = £300,000 - £45,000 = £255,000
LTV against the valuation = £255,000 / £280,000 x 100 = 91.07%
At 91.07% the mortgage sits outside the 85% band the buyer was quoted against, so the lender either withdraws that product or reprices it. The valuation alone drives the number: the same £255,000 loan gives an LTV of 87.93% on a £290,000 valuation and 94.44% on a £270,000 one.
What half a percentage point is worth in pounds
A move between bands is only worth chasing if the rate on the other side pays back the extra deposit. The arithmetic below holds the loan at £240,000, the 80% loan on a £300,000 property, and moves the rate by half a point across a 25 year term.
| Item | At 5.00% | At 4.50% |
|---|---|---|
| Monthly payment | £1,403.02 | £1,334.00 |
| Total paid over 300 months | £420,904.83 | £400,199.38 |
| Interest over the term | £180,904.83 | £160,199.38 |
| Difference | £69.02 a month and £20,705.45 over the term |
The payment comes from the standard annuity formula, with a monthly rate r of 0.05 divided by 12, a term n of 300 months and a principal P of £240,000.
M = P x r / (1 - (1 + r)^-n)
Set the £15,000 that separates the 85% and 80% rows against that £20,705.45. Two effects run together at that point: the larger deposit cuts the balance by £15,000, and the smaller loan may also price in a lower band. The £20,705.45 above isolates the rate effect alone at a fixed balance, so it understates the total saving rather than overstating it.
Method and what the ratio leaves out
The measure is a ratio taken at one moment. It divides the loan the borrower needs by the value placed on the property, and it carries four assumptions worth naming.
The value is the lender's, not the seller's. A valuation is an opinion formed on the day of inspection, and a figure agreed between a buyer and a seller is not a valuation. Where the two differ, the lender's number governs the LTV.
The balance is the amount drawn, not the amount owed over time. On a repayment mortgage the balance falls with every payment, so the LTV of a two-year-old loan is lower than the LTV at origination, even if the property value has not moved. The calculator returns the figure at the point the inputs describe.
The ratio ignores the costs of buying. Deposits are not the only money that leaves the buyer's account on completion, and a deposit squeezed to the last pound leaves nothing for fees, surveys, or tax. A band boundary reached with no reserve is a fragile position.
The ratio says nothing about affordability. Two borrowers with the same LTV can carry very different income risk, and the LTV is not a measure of whether the monthly payment can be met. Lenders test affordability separately, and the FCA's responsible lending rules, tightened under the Mortgage Market Review, sit alongside the LTV rather than inside it.
The arithmetic above assumes a capital and interest mortgage with a rate fixed for the whole term, monthly compounding at the annual rate divided by twelve, no arrangement fee and no early repayment. Interest-only borrowing prices differently and carries its own evidential requirements, which is one reason the FCA found interest-only loans had fallen to 9% of regulated mortgages by 2022, with 55% of those written before the 2008 financial crisis.
Where the 80% threshold comes from
The 80% line is not only a marketing convention. Under the Capital Requirements Regulation a residential mortgage exposure can take a 35% risk weight where the loan is fully and completely secured and the LTV does not exceed 80%, which means a bank holds less capital against that lending than against a high-LTV loan. The revised framework adds a lower band again, at an LTV below 55%, where the risk weight falls to 20%. The effect on a borrower is indirect but real: the capital a lender must hold against the exposure feeds back into the price it offers.
How the ratio falls on its own
A repayment mortgage cuts the LTV with no movement in property prices at all. Take the £240,000 loan at 5.00% used above, on a property that stays at £300,000, and the balance comes down as follows.
| Point in the term | Balance outstanding | LTV against the unchanged £300,000 value |
|---|---|---|
| At completion | £240,000.00 | 80.00% |
| After 1 month | £239,596.98 | 79.87% |
| After 5 years | £212,592.45 | 70.86% |
| After 10 years | £177,418.74 | 59.14% |
| After 15 years | £132,278.25 | 44.09% |
| After 20 years | £74,346.81 | 24.78% |
| After 25 years | £0.00 | 0.00% |
Two of the familiar bands arrive fairly early by repayment alone. The balance passes below 75% of the original value at month 35, just under three years in, and below 70% at month 65, or about five and a half years. It passes below 60% at month 117, a little under ten years. The first month is the slowest of the run, because £1,000.00 of the £1,403.02 payment goes on interest and only £403.02 comes off the balance. Across the first twelve months £11,887.62 goes on interest and £4,948.58 comes off the principal.
Two changes push the ratio the other way. A fall in the property value raises it, which is the negative equity case, and further borrowing against the same property raises it too. Where a borrower takes a further advance, the new balance is spread over a term that can end on a different date from the original loan, and the LTV used for pricing is recalculated on the combined balance.
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