Loan to Value (LTV) Calculator
Frequently Asked Questions
What is LTV?
Loan-to-Value (LTV) is the mortgage amount as a percentage of the property value. Example: £225,000 mortgage on a £300,000 property = 75% LTV. Lower LTV means lower risk for lenders = better interest rates.
How does LTV affect mortgage rates?
UK lenders offer their best rates at 60% LTV or below. Each 5-10% reduction in LTV typically improves available rates. The difference between 95% LTV and 75% LTV can be 1-1.5% in annual interest rate.
What is the minimum deposit needed?
The minimum deposit most lenders accept is 5% (95% LTV). However, 10% (90% LTV) gives significantly more choice. The Mortgage Guarantee Scheme supports some 95% LTV lending.
Can I reduce my LTV before remortgaging?
Yes — overpaying your mortgage reduces the outstanding balance, improving your LTV. When remortgaging, a lower LTV accesses better rates. Even small improvements (90%→85% or 85%→80%) can unlock materially better rates.
What is negative equity?
Negative equity occurs when your mortgage balance exceeds the property value (LTV over 100%). This can happen if house prices fall. You cannot typically remortgage or move home until the equity position improves.
How is LTV calculated on a remortgage?
LTV = current mortgage balance ÷ current property value. Get a new valuation or use recent local sale prices to estimate. Lenders may use their own surveyor's valuation which may differ from market price.
Does LTV affect insurance?
Building and contents insurance isn't directly linked to LTV. However, if you're at high LTV with a repayment mortgage and your home is heavily mortgaged, adequate buildings insurance is critical to protect both you and your lender.
How much does 1% rate difference cost over a mortgage term?
On a £225,000 mortgage over 25 years, a 1% rate increase adds approximately £115-130 per month in payments and £34,000-40,000 in total interest over the term — making LTV optimisation very valuable.