1. What is LTV?

The Loan-to-Value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In the UK property market, it represents how much of the property's value is covered by the mortgage.

2. How Does the Calculator Work?

The calculator uses the LTV formula:

Where:

• Loan Amount — The mortgage amount you're applying for (£)
• Property Value — The purchase price or current market value of the property (£)

Explanation: The equation calculates what percentage of the property's value is being borrowed.

3. Importance of LTV Calculation

Details: LTV is crucial in mortgage applications as it affects interest rates, loan eligibility, and whether you'll need to pay for mortgage insurance. Lower LTV ratios generally mean better mortgage deals.

4. Using the Calculator

Tips: Enter the loan amount in £ (without commas), property value in £ (without commas). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good LTV ratio in the UK?
A: Generally, below 80% is considered good, with the best rates available at 60% LTV or lower. Above 90% may have higher interest rates.

Q2: How does LTV affect my mortgage?
A: Higher LTV means higher risk for lenders, typically resulting in higher interest rates or stricter lending criteria.

Q3: Can I reduce my LTV ratio?
A: Yes, by increasing your deposit, negotiating a lower purchase price, or through property value appreciation over time.

Q4: What's the maximum LTV in the UK?
A: Most lenders offer up to 95% LTV, though some government schemes may offer higher.

Q5: Does LTV affect remortgaging?
A: Yes, your LTV when remortgaging will be based on your outstanding loan amount versus the current property value.