Deposit & LTV · 6 min read
Understanding loan-to-value (LTV)
In short
Loan-to-value (LTV) is the ratio between the mortgage and the value of the property it is secured against, written as a percentage: (mortgage amount ÷ property value) × 100. A £180,000 mortgage against a property valued at £200,000 is 90% LTV. Knowing your approximate LTV helps you follow the conversation with a conveyancer or a qualified mortgage adviser. It does not tell you what any lender would offer you.
Who this is for
- First-time buyers working out how the deposit changes the percentage
- Home movers estimating the figures from a sale
- Remortgagers comparing an outstanding balance with the value a lender would use
Key points
The formula
LTV = (mortgage amount ÷ property value) × 100. On a straightforward purchase where the deposit plus the mortgage add up exactly to the value being used, the deposit percentage is the remainder — 100 minus the LTV. That shortcut stops working as soon as anything else affects the amount borrowed or the value used.
Which value counts
The value used is a valuation of the property the mortgage is secured against — for regulatory reporting the FCA refers to the most recent valuation. A lender's valuation figure may differ from an asking price, an online estimate or your own view.
It moves over time
MoneyHelper explains that LTV changes as the mortgage balance is repaid and as the property value changes, so the percentage is a snapshot rather than a fixed feature of your mortgage.
Why people talk about it
LTV is a recognised mortgage ratio and appears in regulated pre-application disclosure, where a maximum available loan can be expressed relative to the property value. MoneyHelper notes a lower LTV can sometimes be associated with cheaper deals. That is a general tendency, not a rule, a quotation or a promise about what is available to you.
Exceptions and things that vary
- For a remortgage, the relevant figure is the current value the lender or its valuation uses, not the original purchase price and not your own estimate.
- If a fee is actually added to the mortgage balance rather than paid separately, the amount borrowed is higher, so the same arithmetic produces a higher LTV. Whether a fee can be added at all is a product question for your lender or adviser.
- In shared-ownership structures the relevant value can be the part of the property the mortgage is secured against rather than the whole-property value — the FCA's reporting guidance gives an example where a £40,000 loan against a £50,000 relevant value is 80% LTV. Schemes and products differ, so confirm how your own calculation should be done with your lender or a qualified adviser.
- A valuation that differs from what you expected changes the LTV even if the amount you are borrowing has not changed.
How to work through it
Note the value you are using
Use a realistic figure, and note that a lender will use its own valuation.
Note the mortgage amount
For a purchase, the price less your deposit. For a remortgage, the outstanding balance.
Do the arithmetic
Divide the mortgage by the value and multiply by 100. Our LTV calculator shows the working.
Try a different value
Re-run the sum with a slightly different value to see how much the percentage moves. This is arithmetic practice, not a prediction.
Illustrative example (not a real case)
A buyer agrees a purchase at £250,000 with a £25,000 deposit, so the mortgage amount is £225,000: (225,000 ÷ 250,000) × 100 = 90% LTV. Now suppose the amount being borrowed stays at £225,000 and the lender's valuation is £240,000. The same arithmetic gives (225,000 ÷ 240,000) × 100 = 93.75% LTV. The mortgage amount has not changed; only the value used in the sum has. This is illustrative arithmetic only and tells you nothing about what a lender would decide.
Illustrative only. Figures and situations in examples are made up to show a method. They are not typical, not a benchmark and not a prediction of any outcome.
What not to assume
- Do not assume a particular LTV makes any product or rate available to you, or that it has any bearing on whether an application succeeds.
- Do not assume an online estimate or an asking price matches the valuation a lender would use.
- Do not assume LTV alone determines an application outcome — it is one figure among many.
- Do not assume the simple deposit shortcut holds where fees are added to the loan or where a scheme changes the value used.
Questions for a qualified adviser
We cannot answer these for you, and we do not introduce or recommend advisers. Take them to a suitably qualified FCA-authorised mortgage adviser of your own choosing.
- Based on realistic figures, what LTV would my situation be working with?
- If a fee could be added to the loan, how would that change the amount borrowed and the LTV?
- What happens to the calculation if the valuation differs from the price?
- How should the LTV be calculated for the scheme or structure I am considering?
Work out my loan-to-value
Loan-to-value from a property value and a loan amount. Educational arithmetic only.
Related reading
A resource that may help you organise the next step
Optional educational preparation resources. Nothing here is mortgage advice, a lender or product recommendation, an eligibility assessment or a prediction of whether an application would be accepted.
- Mortgage Preparation Starter Checklist — free
A one-page starting point for the paperwork most people are asked for.
- Readiness checker
Eight broad preparation questions. It never says whether you would be eligible, approved or declined.
- First-Time Buyer Preparation Planner — £7.99
A preparation resource, not mortgage advice or a lender recommendation. Purchases are not switched on yet.
Sources
No statistic, regulator citation or third-party claim is published until its source is verified. Unverified entries are shown as placeholders.
- VerifiedBank of England — The contribution of the Financial Policy Committee to UK financial stability (definition of the loan-to-value ratio). Checked 20 August 2026.
- VerifiedFinancial Conduct Authority — MLA E Residential loans to individuals FAQs (valuation basis and shared-ownership calculation example). Regulatory reporting guidance for firms. Checked 20 August 2026.
- VerifiedFCA Handbook — MCOB 5A pre-application disclosure (a maximum available loan may be expressed as a loan-to-value ratio). Checked 20 August 2026.
- VerifiedMoneyHelper — Remortgaging to get the best deal (consumer definition, calculation, and that LTV changes over time). Checked 20 August 2026.
- VerifiedMoneyHelper — First-time home buyer guide (illustrative 90% LTV arithmetic). Checked 20 August 2026.
Written by
Before You Apply editorial
Written by the publisher's editorial function, not by a named individual and not by a mortgage adviser. Before You Apply is not FCA authorised.
Reviewed by
Independent reviewer — to be appointed
No independent reviewer has been appointed yet. No review, qualification, FCA status or endorsement is claimed for this content.
- Last fact-checked 2026-08-20
- Not yet independently reviewed
- Next review due 2027-02-20
Disclosure: this guide is educational. Before You Apply receives no payment for mentioning any lender, product or firm, and none are named.
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