What is Loan to Value Ratio?
What is loan to value ratio (LTV)?
Loan to value – or LTV – is the ratio of the value of the home you want to buy and the loan you’ll need to buy it, shown as a percentage.
Having a good LTV can lower the interest rates offered to you and mean you have more equity in your home.
A higher LTV is a greater risk to lenders if the property market drops. This is because your existing mortgage could exceed the value of your home, resulting in a loss for the lender and puts you in a negative equity position.
How to work out LTV
The easiest way to work out your loan to value ratio is to take away your deposit amount from the value of the house, then work out the difference as a percentage.
For example, if your house is valued at £250,000 and you have a deposit of £50,000, you would need a mortgage of £200,000.
To calculate your LTV ratio:
200,000 ÷ 250,000 = 0.8
0.8 x 100 = 80%
This gives you an 80% loan to value ratio.
To work out your Loan to Value ratio and see how much you could borrow, use our handy mortgage calculator.
It’s simple to use – enter your:
- Home’s estimated value
- Deposit size
- Loan term
How to change your LTV?
The best way to raise your LTV ratio is to put down a bigger deposit on your home. This may mean waiting to buy a home until you can save a bit more money.
Other ways to get a lower LTV ratio include:
Buy a less expensive house
Finding a house with a lower asking price will reduce your LTV. This could be fewer bedrooms or looking in an area where house prices are lower.
Calculators & tools
We have a range of mortgage calculators to help you:
- Find out how much you could borrow from Lloyds Bank
- See how much you could save if you make overpayments on your mortgage
- Get an idea how a change to the Bank of England Base Rate could effect your monthly payments
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
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