How to Work Out Your Loan to Value

Loan to value is one of the most important numbers in any mortgage, because it quietly decides which deals you can access and what rate you'll pay.

Loan to value (LTV) is your outstanding mortgage expressed as a percentage of your property's value. Divide the loan by the value and multiply by 100. A £150,000 mortgage on a £200,000 home is a 75% LTV. The lower your LTV, the better the mortgage rates you can usually get.

At a glance

Formula: (Loan ÷ value) × 100
Example: £150k ÷ £200k = 75%
Lower LTV: Cheaper rates
Bands step at: 60, 75, 80, 85, 90%

The LTV Formula

Working out your loan to value takes two numbers and a moment's arithmetic.

Your outstanding mortgage. The balance you still owe, from your latest statement — not the original loan amount.
Your property's value. For a purchase, this is the price (or the lender's valuation if lower). For a remortgage, it's the current market value — the free house value calculator gives you a quick postcode estimate.

Then: divide the loan by the value, and multiply by 100.

£150,000 ÷ £200,000 = 0.75, which is a 75% LTV. The other 25% is your equity — the two always add up to 100%.

Why LTV Decides Your Rate

Lenders price mortgages on risk. A borrower with a small loan against a valuable home is low risk — if things go wrong, the lender can recover its money easily. A borrower with a large loan against the same home is riskier, so the rate is higher to compensate.

This is why loan-to-value directly impacts your mortgage repayments. Even a fraction of a percent on the rate adds up over the life of a mortgage.

The LTV Bands

Lenders don't price LTV smoothly — they set it in bands, and the best rates sit at the lower end. Typical bands look like this:

60% LTV and below — the sharpest rates on the market.
75% LTV — still very competitive; a common sweet spot.
80–85% LTV — reasonable rates, widely available.
90% LTV — accessible, but rates step up noticeably.
95% LTV — the highest mainstream rates, often via schemes like Freedom to Buy.

Because the pricing steps at each threshold, nudging just below a band can save real money. If you're at 76%, finding a little extra deposit or a slightly higher valuation to reach 75% can move you into cheaper territory.

How to Improve Your LTV

You can lower your loan to value in three ways:

Overpay your mortgage to reduce the balance (check for early repayment charges first).
Wait for values to rise — if your area's prices have grown, your LTV falls automatically. Estimate this with the House Price Index.
Add a larger deposit when buying, or use savings at remortgage time.

If your home has increased in value, it's well worth checking your new LTV before you renew — you may qualify for a better band. Our guide on remortgaging when house value has increased covers this in detail.

When LTV Works Against You

If prices fall or you borrowed with a small deposit, your LTV can climb above 100% — this is negative equity, where the mortgage exceeds the home's value. It limits your ability to remortgage or move until values recover or you pay the balance down.

Do lenders use my estimate or their own valuation?

Their own. You can estimate your LTV to plan, but the lender's valuer sets the figure that determines your actual deal.

Is a lower LTV always better?

For rates, yes. But tying up every spare pound as deposit isn't always wise if it leaves you with no emergency savings. Balance the rate benefit against keeping a cushion.

What LTV do I need to remortgage?

Most lenders remortgage up to 90% LTV, sometimes higher. The lower your LTV, the more deals — and better rates — open up to you.

To work out your loan to value, you first need an accurate property value. The free house value calculator estimates yours from your postcode, so you can divide your mortgage balance by it and see exactly which LTV band you fall into.