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What is LTV (loan-to-value)? A quick explanation with a mini example

LTV (loan-to-value) is the percentage of the property price/value you borrow. Here’s the formula, a mini example, and why it matters.

Published: 04/04/2026 • Last verified: 04/04/2026

The short answer

LTV stands for loan‑to‑value. It’s the percentage of a property’s value that you’re borrowing with a mortgage.

The basic formula is:

  • ( \text{LTV} = (\text{mortgage} \div \text{property value}) × 100 )

Lower LTV usually means the lender is taking less risk, which can affect which deals are available and the interest rates offered.

A tiny example

If the home costs £250,000 and you borrow £225,000, your LTV is:

  • (£225,000 \div £250,000 = 0.90) → 90% LTV

That’s the same as a 10% deposit (because your deposit would be £25,000).

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