What is LTV?
LTV stands for Loan to Value and shows the relative size of a secured loan such as a mortgage versus the value of the asset it is secured against.
For example: if you wanted to take out a mortgage for £50,000 on a property worth £100,000, this would give you an LTV of 50% i.e. the loan is 50% of the value of the property.
Most mortgage products will specify a maximum LTV that you can borrow with that product.
For a standard residential mortgage, the max LTV is normally 80-85%, however first time buyers may be able to borrow up to 95% LTV, while for Buy to Let (BTL) mortgages 70-75% LTV is more common.
How does LTV affect your mortgage?
In general, the higher your LTV, the higher your interest rate will be. This is because lenders tend to consider a mortgage to be higher risk when it is for a larger proportion of a property’s value.
A higher LTV will therefore usually mean higher monthly repayments, due to the higher rates, and that you will end up repaying more in total over the lifetime of the mortgage.
It is therefore important to give very careful consideration to exactly how much you need to borrow as the lower you can make your LTV, the cheaper your mortgage will likely be.
Try our free LTV calculator to get the best deal on your mortgage
Our free mortgage calculator at the top of the page lets you calculate exactly how much you could borrow at different levels of LTV.
It will then show you matching mortgage deals from across the market, including from all the leading lenders.
This allows you to find the best possible mortgage interest rates that match your borrowing needs, making it really simple to see how much of a difference LTV can make to the cost of borrowing.