The calculation
LTV is the loan amount divided by the value of the asset, shown as a percentage. A £150,000 loan on a £250,000 property is 60% LTV.
Combined LTV
For a second charge loan, lenders add your existing mortgage and the new loan together. A £150,000 mortgage plus a £40,000 loan on a £300,000 home is a combined LTV of about 63%.
Why it matters
Lower LTV means less risk for the lender, which usually means a lower rate and more choice. Rates often step down at 60%, 65% and 70%.
Typical maximums
- Homeowner loans: 75% to 85% combined
- Bridging: 70% to 75%
- Land: 50% to 60%
- Luxury assets: 50% to 70%
Common questions
Does LTV use purchase price or valuation?
Usually the lower of the two for purchases, and the independent valuation for refinances.
Can I lower my LTV?
Yes, by borrowing less, adding a deposit or offering additional security.
This guide is general information, not personal financial advice. If you are worried about debt, free help is available from MoneyHelper, StepChange and Citizens Advice.
Try it: LTV Calculator