What is Loan to Value? (LTV)

Loan-to-Value (LTV) is just a way of showing how much of your home’s purchase price (or value) you’re borrowing and its usually shown as a percentage. 

For example, if your home costs £200,000 and you borrow £180,000, your LTV is 90%. That means you’re covering most of the cost with the mortgage and putting in 10% as your deposit.

Read on to find out more about loan to value (LTV), how it's calculated, and how your LTV might affect your mortgage options.

To find your Loan-to-Value, follow these steps:

1. Take your mortgage amount

Example: £180,000

2. Divide it by your property’s value

Example: £200,000

So: £180,000 ÷ £200,000 = 0.9

3. Multiply the figure you have by 100 to turn this in to a percentage

Example: 0.9 × 100 = 90%

Your LTV is 90%.

That means you’re borrowing 90% of the property’s value and putting in 10% as your deposit.

A lower LTV means you own more of your home. This is great because lenders see it as less risky, and you’re more likely to get better mortgage deals—like lower interest rates.

A higher LTV means a bigger chunk of your home is covered by the mortgage. You own less outright, which lenders see as riskier. Because of that, you might be offered higher interest rates.

Having a small deposit will limit your mortgage options but doesn’t mean you can’t get a mortgage. At NatWest, we offer mortgages for 95% of the purchase price of a property so, as long as you have at least 5% as a deposit, you could get a mortgage. However, if you’re able to put down a bigger deposit, it could help you get a better interest rate. A larger deposit might also mean lower monthly payments or even a shorter mortgage term.

There are mortgage products designed for smaller deposits, especially for first-time buyers. So even if your deposit isn’t huge, there are still options available.

Absolutely! If you’re buying a home, you can improve your Loan-to-Value (LTV) by:

• Saving more for your deposit – The bigger your deposit, the lower your LTV.
• Negotiating the purchase price – Agreeing on a lower price instantly improves your ratio.

Already own your home? Your LTV will naturally improve as you pay down your mortgage. Plus, if your property value increases over time, you’ll be in an even better position when it’s time to remortgage. That could mean lower interest rates and smaller monthly payments.

• Save a bit more for your deposit – Every extra pound helps bring your LTV down.
• Negotiate the purchase price – If you can agree on a lower price for the property that you're buying, your LTV will improve.
• Boost your home’s value – Renovations and home improvements could increase your property’s worth and reduce your LTV.

And don't forget, as you repay your mortgage, the amount of money you owe will decrease - which will improve your LTV. Also, hopefully, the value of your property will increase over time aswell. This will also improve your LTV.