- Loan-to-value, LTV
- the size of your mortgage as a percentage of the property value, so a £225,000 loan on a £250,000 home is 90% LTV.
- Deposit
- the cash you put in. A bigger deposit means a smaller loan and a lower LTV.
- Equity
- the share of the property you own outright, which is the property value minus the mortgage.
- LTV band
- the pricing tiers lenders use, commonly 95%, 90%, 85%, 80%, 75% and 60%, where each step down can unlock a better rate.
- Remortgage
- switching deal, the point at which a lower LTV from overpayments or a higher value can move you to a cheaper band.
Key facts
- On a £250,000 home, a 5% deposit of £12,500 means 95% LTV and a 40% deposit of £100,000 means 60% LTV
- At 90% LTV you put in £25,000 and borrow £225,000; at 75% LTV £62,500 equity against a £187,500 loan
- Pricing usually improves in steps at 90%, 85%, 75% and 60% LTV bands
- Overpaying or a rise in property value can cut your LTV at remortgage without a bigger deposit
Work out your own ratio with the LTV calculator, then see what the loan size means for borrowing in mortgage affordability guide and the mortgage affordability calculator.
You can cut your LTV over time: overpaying reduces the balance, as shown in mortgage overpayment guide, which can move you into a cheaper band at remortgage.
| LTV band | Deposit on a £250,000 home | What it means |
|---|---|---|
| 95% | £12,500 (5%) | The most you can usually borrow, smallest deposit, highest rates |
| 90% | £25,000 (10%) | A common first-time-buyer level |
| 85% | £37,500 (15%) | A better rate tier opens up |
| 75% | £62,500 (25%) | Strong rates, a typical remortgage level |
| 60% | £100,000 (40%) | The cheapest rates available |
Source: WhatsUK calculation on a £250,000 price, 16 June 2026.
What Is LTV?
Loan-to-value is simply the size of your mortgage expressed as a percentage of the property's value. A £180,000 mortgage on a £200,000 property is 90% LTV. The remaining 10% (£20,000) is your deposit. Higher LTV means more lender risk, which means higher interest rates for you.
The formula is: LTV = (Mortgage Amount ÷ Property Value) × 100. Conversely, your deposit percentage = 100 minus your LTV. If you have a 25% deposit, your LTV is 75%. To check your LTV and see which rate tier you qualify for, use our free LTV calculator.
What Is a Good LTV?
Industry data puts the average first-time-buyer LTV at around 77% and the average remortgage at around 74%, because owners build equity over time. Most lenders cap standard lending at 95% LTV, meaning a 5% minimum deposit, and 100% no-deposit deals exist but are rare. Lenders generally treat anything under 80% as a good LTV, under 75% as better, and reserve the sharpest rates for 60% LTV or lower.
LTV Bands and Typical Interest Rates
| LTV Band | Deposit Required | Typical 5-Year Fix Rate* |
|---|---|---|
| ≤60% LTV | 40%+ | Best available rates (~3.8 to 4.2%) |
| 61 to 75% LTV | 25%+ | Low rates (~4.0 to 4.5%) |
| 76 to 85% LTV | 15%+ | Mid-tier rates (~4.4 to 4.9%) |
| 86 to 90% LTV | 10%+ | Higher rates (~4.7 to 5.3%) |
| 91 to 95% LTV | 5%+ | Premium rates (~5.0 to 5.8%) |
| >95% LTV | <5% | Very limited products |
*Indicative 2025 market rates. Actual rates vary by lender, term, and individual circumstances.
Calculating Your LTV
If you already own a property, your LTV changes over time as you repay your mortgage and as the property value changes. When you come to remortgage, the lender will commission a new valuation. If house prices have risen, your LTV will have fallen, potentially qualifying you for a better rate tier.
LTV Calculator
Enter your property value and mortgage amount (or deposit) to see your LTV, which rate band you qualify for, and how much extra deposit you need to reach the next tier.
How to Improve Your LTV
1. Save a larger deposit. Each extra percentage point of deposit is valuable. Crossing a tier boundary (e.g., from 80% to 75% LTV) typically saves more than the same deposit increase within a single tier. Note that a larger deposit also reduces your stamp duty bill for first-time buyers, since the relief threshold is £300,000.
2. Overpay your current mortgage. Many mortgages allow 10% of the outstanding balance in overpayments per year without penalty. This reduces the outstanding loan and therefore the LTV on your next deal. Our overpayment calculator shows exactly how many months you save and how much interest you avoid.
3. Wait for property appreciation. If prices in your area are rising, waiting to remortgage (if you have a tracker or SVR) could meaningfully reduce your LTV with no additional cash required.
You can also cut your LTV without saving more. If you owe £150,000 on a home worth £200,000, your LTV is 75%. If the value rises to £220,000 and the balance is unchanged, your LTV falls to 68%, which can move you into a cheaper band at remortgage.
Remortgaging Strategy
Book a mortgage appointment 3 to 6 months before your current deal expires. Rates are often held for up to 6 months. If rates fall before completion, you can usually switch to the lower rate. If your LTV has improved, specifically ask your broker to recheck the lower tier.First-Time Buyers and High-LTV Mortgages
First-time buyers often start with a 90 to 95% LTV mortgage as they have had less time to accumulate a deposit. The government's Mortgage Guarantee Scheme (extended to 2026) allows lenders to offer 95% LTV products with a government guarantee on part of the loan. This broadens availability but does not improve the rates. High-LTV products remain significantly more expensive.
Shared Ownership is another route: you purchase a share (typically 25 to 75%) of a property and pay rent on the remainder, applying a mortgage only to your share. This significantly reduces the loan size required and can mean a more accessible LTV on the portion you own. Remember to factor in your stamp duty. Read our guide to stamp duty rates in 2026/27 to understand the first-time buyer relief thresholds.
Buy-to-Let LTV Requirements
Buy-to-let mortgages have stricter LTV limits than residential products. Most lenders cap BTL at 75 to 80% LTV, meaning a minimum 20 to 25% deposit. Additionally, the rental income must cover the mortgage payments at a stressed rate (typically 125 to 145% of the monthly payment). This dual constraint (LTV and rental coverage) makes BTL entry require more capital than a residential purchase. Our buy-to-let calculator models both the LTV and rental coverage ratio for any property.
Related Calculators
Frequently Asked Questions
An LTV of 60% or below typically qualifies you for the best mortgage interest rates. At 75% LTV you still access competitive rates. Above 85% LTV, rates increase significantly, and above 90% LTV the choice of lenders narrows considerably. First-time buyers often start at 90-95% LTV.
Divide your mortgage balance by your property's current value and multiply by 100. For example, a £180,000 mortgage on a £250,000 property gives an LTV of 72% (180,000 ÷ 250,000 × 100). Your LTV improves as you repay the mortgage and as property values increase.
Most buy-to-let lenders require a maximum LTV of 75%, meaning a 25% deposit. Some specialist lenders offer up to 80% LTV for experienced landlords. Buy-to-let mortgage rates are typically 0.5-1% higher than residential rates at equivalent LTV levels.
Lenders price mortgages in LTV bands, typically at 60%, 75%, 80%, 85%, 90%, and 95%. Each band carries a higher interest rate. The difference between 60% LTV and 90% LTV can be 0.5-1.5% in interest rate, which on a £200,000 mortgage equals £1,000-£3,000 per year in additional interest.
It depends on the price. On a £250,000 home, a 5% deposit of £12,500 puts you at 95% LTV, £25,000 at 90%, £37,500 at 85%, £62,500 at 75% and £100,000 at 60%. The bigger the deposit, the lower the LTV and usually the better the rate.
The sharpest rates usually sit at 60% LTV or lower, and pricing tends to improve noticeably once you are below 75%. Between 60% and the lowest tiers the gains get smaller, so there is little rate benefit to pushing far below 60%.
Yes. Overpaying your mortgage reduces the balance, and a rise in your property value lifts your equity, both of which cut your LTV by the time you remortgage. Dropping into a lower band can then unlock a cheaper rate even though you did not add a lump-sum deposit.
First-time buyers borrow at an average LTV of around 77%, because most start with a deposit of roughly 10% to 15% and have no existing equity. That is higher than the typical remortgage LTV of about 74%, where owners have built up equity. A lower LTV is still better if you can manage a larger deposit.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- Bank of England Mortgage Lending Statistics- LTV distribution of new mortgage lending
- Financial Conduct Authority - Mortgage Market Study- UK mortgage market structure and rates
- HMRC Stamp Duty Land Tax- How LTV interacts with deposit and SDLT
Last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.