Understanding Loan-to-Value (LTV) Ratios: Your Complete Mortgage Guide (2025)
Master LTV ratios to get the best mortgage rates in the UK. Learn how LTV affects your interest rate, deposit requirements, and discover proven strategies to improve your LTV and save thousands.
Loan-to-Value ratio affects the rates available to you. Lower LTV means better rates.
| LTV | Deposit on £250k | Rate Impact |
|---|---|---|
| 95% | £12,500 | Highest rates |
| 90% | £25,000 | Better rates |
| 80% | £50,000 | Good rates |
| 75% | £62,500 | Best rates |
Key Thresholds
Frequently Asked Questions
What is a good LTV ratio for a mortgage?
A good LTV ratio is 80% or lower (20%+ deposit), which gives you access to the best interest rates and widest lender choice. 75% LTV (25% deposit) is considered excellent and offers the most competitive rates. However, 90-95% LTV mortgages are common for first-time buyers with limited savings.
How much does LTV affect mortgage rates?
LTV significantly affects rates. The difference between 95% and 75% LTV can be 1-1.5% in interest rate, which equals £125-£175 per month on a £200,000 mortgage. Over 25 years, this saves £37,500-£52,500 in total interest. Even moving from 90% to 85% LTV can save £30-£50 per month.
Can I remortgage to a lower LTV?
Yes, and this is one of the best reasons to remortgage. As you pay down your mortgage and your property value increases, your LTV improves. Many homeowners find their LTV has dropped from 90% to 75% after 5 years, allowing them to access much better rates when remortgaging.
What happens if my LTV goes above 100%?
If your property value falls below your mortgage balance, you're in negative equity. This makes remortgaging very difficult as lenders won't offer new deals above 95% LTV. You'll likely be stuck on your lender's expensive SVR until you pay down the mortgage or property values recover.
Do all lenders use the same LTV bands?
No, different lenders have different LTV thresholds and pricing. Some offer better rates at 85% LTV, others at 80%. Some have bands at 60%, 75%, 80%, 85%, 90%, 95%, while others use 65%, 70%, 75%, 80%, 85%, 90%, 95%. This is why using a mortgage broker to compare across lenders is valuable.