Loan to value (LTV): meaning and formula
The definition and the formula, with one EXAMPLE. Loan to value (LTV) is your outstanding mortgage balance divided by the property’s current value, times 100. How bands change pricing is in LTV bands explained, and the calculator does the sum for you.
Last checked UK · illustrative onlyNot a lender or brokerAboutDisclaimer
Published by Rodway Labs — not a mortgage adviser
Published · Last revised
LTV = mortgage balance ÷ current property value × 100
EXAMPLE: the site EXAMPLE balance of £185,000 on an illustrative £250,000 valuation gives 185,000 ÷ 250,000 × 100 = 74% LTV. Equity is £65,000. That sits just inside a typical 75% band. The £250,000 value is an EXAMPLE, not a market valuation.
Work out your LTV with the calculator →How LTV is calculated for a remortgage
- Balance: what you will owe on completion, from a recent statement or redemption figure. If you add fees to the loan or borrow more, add those too.
- Value: today’s value as the new lender sees it, not what you paid. The lender’s valuation (sometimes an automated one) is the figure that counts, and it can come in lower than an online estimate.
- Result: divide balance by value and multiply by 100. Lower is better for you.
The valuation matters as much as the balance. On the same £185,000 balance, an EXAMPLE valuation of £230,000 gives about 80.4% LTV, which is above a typical 75% band. Repaying your mortgage and house prices rising both lower LTV over time, which is one reason a remortgage can unlock better pricing than the deal you took out.
How it affects a remortgage
Many UK lenders set rates in bands, typically up to 60%, 75%, 85% and 90% LTV (exact cut-offs vary by lender). Being just under a band edge often opens more products and keener pricing than being just over it. A lower band does not guarantee a cheaper deal, and fees and early repayment charges often decide the real cost, so check those before chasing a rate.
On the EXAMPLE, reaching a 60% band at a £250,000 value would need a balance of £150,000, which is £35,000 less than today. Try your own numbers in the LTV & equity calculator, and see how bands interact with pricing in LTV bands explained.
A better band only helps if the deal beats the cost of getting there. On the EXAMPLE, a new-lender deal with £1,249 of net fees needs a big enough monthly saving to pay those fees back within the time you expect to keep it. Check that in the true-cost calculator before you weigh the rate.
EXAMPLE: how the valuation and the balance move the band
- £185,000 on a £250,000 value
- 74.0% · equity £65,000 · inside a typical 75% band
- Valuation comes in at £240,000
- 77.1% · now above a 75% edge
- Lowest value that keeps 75%
- about £246,667 (£185,000 ÷ 0.75)
- Value rises to £265,000
- 69.8%
- £1,499 of fees added to the loan
- £186,499 ÷ £250,000 = 74.6%
- Balance after 24 more payments at 4.19%
- about £174,309, or 69.7% on £250,000 with no change in value
Illustrative only, using the site LTV and repayment maths. The property values are EXAMPLES, not valuations.
Common mistakes
- Using the purchase price instead of today’s value. For a remortgage, LTV uses the value the new lender accepts now.
- Treating an online estimate as the valuation. The lender’s figure is the one that counts. MoneyHelper notes that if you think it is too low you can ask the lender to look again, with evidence such as comparable sales.
- Forgetting fees added to the loan. On the EXAMPLE, adding £1,499 moves LTV from 74.0% to 74.6%. That is small here, but from a start of 74.8% it would cross a 75% edge.
- Rounding down. A band of “up to 75%” is a limit, so 75.1% is outside it.
Edge cases
- Negative equity. If the balance is more than the value, LTV is over 100%. MoneyHelper notes this causes problems when remortgaging, and suggests checking what the current lender offers, as some product transfers do not need an affordability assessment.
- Borrowing more at the same time. LTV is worked on the total after the extra borrowing: a £10,000 further advance on the EXAMPLE takes it from 74% to 78%.
- Repayment alone can change the band. Paying down capital lowers LTV even if prices do not move, as the 24-month row shows.
- The ESIS states it. Under the FCA’s MCOB 5A rules the ESIS shows, where it applies, either the maximum loan relative to the property value or the minimum value needed for the amount illustrated.
More reading
- The remortgage process — where the valuation sits in the timeline.
- Credit and affordability when switching — what else a new lender checks.
Sources checked 2 November 2026
- MoneyHelper: remortgaging to cut costs — remortgage and product transfer definitions, switching costs, LTV formula, valuations, porting and negative equity.
- FCA Handbook MCOB 5A (ESIS rules) — what an ESIS must contain, when it must be given, and how the APRC and early repayment sections are completed.
Also see: MoneyHelper’s remortgaging guide explains loan to value as the balance divided by the property value, multiplied by 100, and notes that you can ask a lender to reconsider a valuation you think is too low.
Definitions here are plain English for this site, not lender, broker or FCA-regulated advice. Always check your own offer and the lender’s valuation. Last checked: 2 November 2026.