Deposits and LTV
How to Calculate Loan-to-Value
A clear home-buying guide to loan-to-value, deposit share, remortgage scenarios, and why lenders pay attention to the percentage.
Loan-to-value, or LTV, compares a mortgage amount with the property value. Use the loan-to-value calculator to check LTV from property value, deposit, or target percentage.
The short version
The formula is:
LTV = mortgage amount / property value x 100
If a property is worth 300,000 and the mortgage is 240,000, the LTV is 80%. The deposit share is the remaining 20%.
Try it with your own numbers
Use the loan-to-value calculator alongside the mortgage calculator. For UK purchase planning, also check the stamp duty calculator and moving costs calculator.
How the calculation works
Start with the property value. Then identify the mortgage amount. If you know the deposit instead, subtract the deposit from the property value to estimate the mortgage amount.
For example, a 50,000 deposit on a 250,000 property means the mortgage is 200,000. The LTV is 200,000 / 250,000 x 100 = 80%.
A worked example
Suppose:
- Property value: 425,000
- Deposit: 63,750
- Mortgage amount: 361,250
LTV = 361,250 / 425,000 x 100 = 85%.
Deposit share = 63,750 / 425,000 x 100 = 15%.
Watch-outs
- Dividing deposit by mortgage amount instead of property value.
- Using asking price when the lender uses a different valuation.
- Forgetting that remortgage LTV may use current value, not purchase price.
- Treating an LTV estimate as mortgage approval.
- Ignoring fees that are added to the loan.
How to read the result
Use LTV to understand deposit strength and compare mortgage scenarios. Lower LTV can sometimes open different rate bands, but lender rules vary. The calculation is only one part of affordability and approval.
Tools mentioned in this article
Reader questions
Is 80% LTV the same as a 20% deposit?
Yes, if there are no fees added to the mortgage and the lender uses the same property value.
Can LTV change after purchase?
Yes. It changes as the mortgage balance falls or the property value changes.
What LTV do lenders prefer?
It varies by lender and market. Lower LTV is generally less risky, but affordability checks still matter.
Should I include buying costs in LTV?
Usually no. LTV compares the loan secured on the property with the property value, not total moving costs.
