What is LTV on a mortgage?
LTV stands for loan-to-value, and it's one of the most important numbers in any mortgage application. It affects whether a lender approves you, the interest rate you're offered, and which products you can access. Whether you're saving for a first home or approaching a remortgage, understanding LTV shows you where you stand — and what you can do to improve your position.
LTV in plain English
LTV is the size of your mortgage expressed as a percentage of the property's value. It tells the lender how much of the purchase they're funding versus how much you're covering with your deposit.
LTV (%) = (Mortgage ÷ Property value) × 100
Or, more simply: LTV (%) = 100 − your deposit percentage
Example: You buy a £250,000 property with a £25,000 deposit (10%). Your mortgage is £225,000. That's £225,000 ÷ £250,000 × 100 = 90% LTV.
One detail that catches buyers out: lenders calculate LTV using the lower of the agreed price and their own surveyor's valuation. If you agree to pay £260,000 but the surveyor values the home at £245,000, the lender uses £245,000 — giving you a higher LTV than expected. This is called a down valuation (covered below).
LTV is the mirror image of equity. An 80% LTV means you own 20% of the property — that 20% is your equity. As you repay your mortgage or the property gains value, your equity grows and your LTV falls.
Why LTV matters for your mortgage
Lenders use LTV as a core measure of risk. A borrower at 60% LTV has put in 40% of the value — the lender is well-protected even if prices dip. A borrower at 95% has put in just 5%, leaving the lender far more exposed. That difference drives three things:
- Approval. Every lender sets a maximum LTV, and many products only exist below specific thresholds. Push above a lender's limit and they'll decline you, whatever your income. Because lenders draw their lines in different places, the same borrower can get a yes from one and a no from another.
- Your rate. Lenders price in LTV tiers, with rates typically improving at 95%, 90%, 85%, 80%, 75% and 60%. Crossing one of those thresholds downward — even slightly — can move you into a cheaper tier.
- Product choice. More lenders compete for lower-LTV business. At 75% or below you'll see the full market; at 90–95% your options narrow.
A larger deposit — even one that just crosses a single threshold — can make a real difference to your rate and the products open to you.
How to calculate your LTV
Buying: subtract your deposit from the purchase price to get your mortgage amount, then divide by the purchase price and multiply by 100.
£300,000 price − £45,000 deposit (15%) = £255,000 mortgage. £255,000 ÷ £300,000 × 100 = 85% LTV.
Remortgaging: the formula is the same, but use your property's current estimated value and your outstanding balance.
Bought at £280,000, now worth £310,000, £196,000 still owed. £196,000 ÷ £310,000 × 100 = 63% LTV — well below the 80% you started at, opening up more competitive deals.
LTV bands and what they mean
Lenders group products into LTV tiers, with different rates and criteria at each level. Thresholds vary by lender and shift with the market, but these breakpoints appear consistently.
| LTV band | Deposit needed | Typical borrower | What to expect |
|---|---|---|---|
| 60% or below | 40%+ | Remortgagors with strong equity; repeat buyers; buy-to-let landlords | Most competitive rates; broadest choice |
| 61–75% | 25–40% | Home movers; strong remortgagors; buy-to-let landlords (most BTL caps at 75%) | Very competitive; wide product range |
| 76–85% | 15–25% | FTBs with solid savings; home movers | Good choice; rates step up gradually |
| 86–90% | 10–15% | Most common FTB entry tier | Solid mainstream range; rates notably higher than sub-75% |
| 91–95% | 5–10% | High-LTV FTBs; Freedom to Buy users | Limited choice; higher rates; strict criteria |
| Above 95% | Below 5% | Specialist products only | Very few lenders; high credit/income requirements |
Source: General UK mortgage market patterns, June 2026. Individual lender thresholds vary. Indicative only — not a guarantee of eligibility or rate.
LTV is one factor, not the only one. Even at the same LTV, two borrowers can get different outcomes. Your credit history, income, employment type, the property itself, and your age at the end of the term all matter. A lower LTV helps — but it doesn't guarantee approval or the best deal.
LTV for first-time buyers and low deposits
For most first-time buyers, the deposit is the biggest constraint — and it sets your starting LTV.
95% LTV mortgages (5% deposit) are a mainstream option from a range of lenders on standard residential properties. Rates are higher than at lower tiers, but this is an established part of the market, not a last resort.
The Freedom to Buy scheme (formerly the Mortgage Guarantee Scheme) became permanent in July 2025. It works behind the scenes: the government partially guarantees participating lenders on 91–95% LTV mortgages, encouraging them to keep low-deposit products available. It's open to first-time buyers and home movers (not buy-to-let), on repayment mortgages, for properties up to £600,000. You still need to pass standard affordability and credit checks, and the guarantee benefits the lender — it doesn't automatically lower your rate. Many lenders now offer 95% deals independently, so the scheme acts as a market backstop. Full details on GOV.UK.
A small number of lenders have recently gone further, allowing some first-time buyers to borrow above 95% (effectively 96–98% LTV) with very small deposits. These are not widely available and carry strict conditions — strong credit, capped income multiples, and exclusions on new-builds, shared ownership and gifted deposits. If you're exploring this, a whole-of-market broker is essential.
A note on new-builds: many lenders cap LTV lower on new-build properties — often 85–90% on houses and 75–85% on flats — because of the “new-build premium” that may not survive resale. If you're buying new-build with a 10% deposit assuming 90% is available, check with a broker first; you may need more.
5% deposit (95% LTV)
Less to save, so you can buy sooner. But rates are higher, choice is narrower, and your equity cushion is thin — if prices fall shortly after you buy, you have little buffer before negative equity.
10% deposit (90% LTV)
Longer to save, but you cross into a wider tier with lower rates and more lenders competing. Your starting equity is stronger, giving more protection against price falls and a better first remortgage.
Neither is automatically better — it depends on your finances, the local market, and how long the extra deposit would take to save. A qualified adviser can help you weigh it up.
How your LTV changes over time
LTV isn't fixed at purchase. On a repayment mortgage, each payment chips away at your balance, so your LTV falls over time (assuming the property holds its value). If the property gains value, your LTV improves further with no effort; if values fall, it rises.
What is negative equity? It means your mortgage is larger than your property is worth — an LTV above 100%. It only becomes a practical problem if you need to sell or remortgage while in that position, as you'd have to cover the shortfall yourself. Borrowers who bought at very high LTV are most exposed. Simply living there and making payments is unaffected, and the position typically corrects as you repay and values recover.
When a fixed-rate deal ends, your lender reassesses your LTV using your current balance and a fresh valuation. If you've dropped into a lower tier, you may qualify for rates that weren't available before. You can speed this up with overpayments where your terms allow — usually up to 10% of the balance per year on a fixed deal without an early repayment charge. See our Mortgage Repayment Guide for how overpayments affect your balance.
Down valuations — what happens and what to do
A down valuation is when the lender's surveyor values the property below your agreed price. Because lenders use the lower figure, your LTV jumps — sometimes enough to push you out of the tier you applied for.
You agree £300,000 with a £30,000 deposit, expecting 90% LTV. The surveyor values it at £285,000. Your real LTV becomes £270,000 ÷ £285,000 = 94.7% — now outside the 90% tier.
Your main options:
- Renegotiate the price. A down valuation is strong grounds to ask the seller to drop to the surveyor's figure. Many accept rather than restart the sale.
- Top up your deposit. Cover the gap from your own funds to bring LTV back down.
- Challenge the valuation. You or your broker can ask the lender to review it, backed by evidence of comparable recent sales.
- Try another lender. Different lenders use different surveyors, so a fresh application may value differently — though it costs time.
- Walk away. Where the valuation reflects genuine concerns, pulling out may be the right call. Your solicitor can advise on your position.
A broker alongside you during the purchase is particularly valuable at this stage.
Frequently asked questions
There's no single answer — "good" depends on what you've saved, the price, and the market when you apply. As a pattern, 90% LTV (10% deposit) opens a meaningfully wider range than 95%, and the most competitive rates appear at 75% and below. But for many first-time buyers, reaching a very low LTV isn't realistic soon, and there's no benefit in delaying a purchase indefinitely to chase one. The right target is one you can reach without an unreasonable wait.
Higher LTV means a thinner equity cushion, so a 95% borrower is closer to negative equity than someone at 80% if prices fall. That's a real risk to understand. That said, 95% LTV is mainstream and fully regulated — millions have bought this way. The question is whether the trade-off suits you: waiting to save a bigger deposit protects against short-term price falls, but means more time renting. It's a personal calculation.
Yes. 95% LTV mortgages are available from a range of mainstream lenders, and the permanent Freedom to Buy scheme (since July 2025) supports their availability. You'll still pass standard affordability and credit checks, and rates are higher than at lower tiers. Not all property types qualify — new-builds and high-rise flats often have stricter limits, so confirm eligibility for your specific property.
Standard no-deposit mortgages aren't widely available from mainstream lenders. A few specialist products exist, such as guarantor mortgages where a family member's property or savings act as security. Some niche products let first-time buyers buy with a very small flat cash sum, which on higher-value homes can exceed 98% LTV. These carry strict requirements and aren't available on all properties. A whole-of-market broker is essential here.
At remortgage, your lender reassesses your LTV using your current balance and a fresh valuation. If it's improved since purchase — through repayment and/or rising values — you may sit in a lower, cheaper tier than before. If values have fallen and your LTV is higher, your options may be more limited. Checking your LTV before your fixed deal expires is one of the most useful things you can do ahead of remortgage.
They're two separate checks measuring different things. LTV (loan-to-value) compares your mortgage to the property's value and sets which rate tiers you can reach. LTI (loan-to-income) compares your mortgage to your income — most lenders cap around 4–4.5× gross income — and limits how much you can borrow regardless of deposit. Both need to work in your favour at once: a big deposit won't help if the loan exceeds what your income supports, and a high income won't help without enough deposit. Our How much can I borrow? guide covers LTI and affordability in detail.
📖 Also worth reading: How much can I borrow? — once you know your LTV, this shows what lenders are likely to offer based on your income, giving you the full picture. And the First-Time Buyer Complete Guide covers the entire buying journey from deposit to completion, with LTV in its proper context.