Loan-to-Value (LTV) Calculator

Loan-to-value is your mortgage as a percentage of the property's value. Borrow £238,000 against a £280,000 home and your LTV is 85% — the remaining 15% (£42,000) is your equity. Lower LTV means the lender is risking less of the property's worth, so they reward you with a cheaper rate.

Lenders price in discrete bands — typically 95%, 90%, 85%, 80%, 75% and 60%. They're step changes, not a smooth slope: moving from 80.1% to 79.9% can unlock a noticeably lower rate on the entire loan, not just the part above the threshold. That makes a small overpayment near a boundary one of the highest-return moves in personal finance.

Two levers move LTV: a bigger deposit (or overpayment) shrinks the loan, and a higher valuation lifts the value. At remortgage, house-price growth since you bought can quietly drop your LTV into a cheaper band — always check before you assume you're stuck on your old rate. Below 60% LTV the rate benefit largely flattens, so further overpayments are better weighed against pensions and ISAs.

With a £42,000 deposit you're at 85% LTV on a £280,000 home. To reach 80% you need the loan down to £224,000 — a deposit of £56,000, so £14,000 more. If that unlocks a rate cut of even 0.3% on a £224,000 loan, that's around £672 a year saved for the life of the deal, on top of the interest the extra deposit itself avoids.

• Assuming the purchase price is the value. Lenders use their own valuation, which can be lower — pushing your real LTV up and the rate with it.
• Ignoring growth at remortgage. Price rises since you bought may have lowered your LTV into a cheaper band. Check before re-fixing.
• Over-stretching to a round number. Don't drain emergency savings to hit a band; keep a cash buffer for moving and surprises.