What loan-to-value actually measures
Loan-to-value, almost always shortened to LTV, is simply the size of your mortgage expressed as a percentage of the property's value. Borrow £240,000 against a £300,000 property and your LTV is 80%, because your loan covers 80% of the purchase price and your deposit (or existing equity, if you're remortgaging) covers the remaining 20%. It's one of the two or three most important numbers in UK mortgage lending, because it's the main measure lenders use to judge how much risk they're taking on if property prices fall or you're unable to keep up repayments.
The calculator above does the arithmetic for you: enter the property's value and your deposit or equity, and it works out the loan you'd need and the resulting LTV, along with roughly where that falls in the typical lending tiers UK mortgage providers use to price their products.
Why LTV drives the interest rate you're offered
Mortgage rates are priced in tiers, and LTV is usually the single biggest factor determining which tier you land in. A lender offering a fixed-rate deal will typically publish several versions of essentially the same product — one rate for up to 60% LTV, a slightly higher rate for 60–75%, higher again for 75–85%, and so on up to 90–95% at the top end. The logic is straightforward: at a lower LTV, the lender has a bigger cushion of your own equity absorbing any fall in property values before their own capital is at risk, so they're willing to offer a cheaper rate in exchange for that lower risk. At a 95% LTV, a relatively small drop in the property's value could tip the loan into negative equity, so lenders price that additional risk into a higher rate.
This is why the gap between, say, a 90% and an 85% LTV deal is often larger in practice than the 5 percentage point difference in deposit size might suggest — you're not just borrowing a bit less, you're often moving into an entirely different, cheaper pricing tier. If you're close to a tier boundary, it can sometimes be worth finding a slightly larger deposit specifically to cross into the next band down.
LTV when you're buying versus remortgaging
For a purchase, your LTV is set by your deposit relative to the purchase price (or the lender's valuation, if lower). For a remortgage, it's set by your outstanding mortgage balance relative to the property's current value — which means your LTV can improve over time even without overpaying a penny, simply because you've paid down some capital and, in many parts of the UK, property values have risen. This is one reason it's worth checking your LTV again shortly before your current fixed or tracker deal ends: if it's moved into a better tier since you last took out a mortgage, you may qualify for meaningfully better rates than you're currently on. Our remortgaging guide covers the timing and process in more detail, and our remortgage savings calculator can help you weigh the cost of switching against what a lower rate could actually save you.
What counts as your deposit or equity
For a purchase, your deposit is simply the cash you're putting down — savings, an inheritance, proceeds from selling another property, or in some cases a gifted deposit from family (lenders will usually want a letter confirming it's a genuine gift, not a loan that has to be repaid). For a remortgage, your "deposit" is really your accumulated equity: the property's current value minus whatever you still owe on your existing mortgage. It's worth getting a realistic, up-to-date valuation rather than assuming your property has kept rising in line with the wider market, since lenders will use their own valuation, which can sometimes come in more conservatively than an estate agent's estimate or an online valuation tool.
Improving your LTV before you apply
If your current LTV sits just above a pricing tier boundary, a few practical options can help nudge you into a cheaper bracket: saving a little longer before buying, using a larger gifted deposit if one is available, or, for a remortgage, waiting a few extra months to pay down more capital or to benefit from a scheduled valuation update. Government schemes such as the Lifetime ISA can also help first-time buyers build a larger deposit more efficiently, since the government adds a 25% bonus on top of what you save — our Lifetime ISA guide explains how that works and the rules around using it towards a first home. Whatever route you take, understanding exactly where your LTV sits, and how close you are to the next tier, is one of the most practical pieces of preparation you can do before speaking to a broker or lender.