1. What is Loan To Value (LTV)?

Loan To Value (LTV) is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. It's commonly used in mortgage lending to assess the risk of a loan.

2. How Does the Calculator Work?

The calculator uses the LTV formula:

Where:

• Loan Amount — The amount of money borrowed (GBP)
• Property Value — The value of the property being purchased (GBP)

Explanation: The LTV ratio shows what percentage of the property's value is being financed by the loan. A lower LTV typically means better loan terms and lower interest rates.

3. Importance of LTV Calculation

Details: LTV is crucial for mortgage lenders to assess risk. Lower LTV ratios generally indicate less risk for the lender, which can result in more favorable loan terms for the borrower.

4. Using the Calculator

Tips: Enter the loan amount and property value in GBP. Both values must be positive numbers. The calculator will compute the LTV percentage automatically.

5. Frequently Asked Questions (FAQ)

Q1: What is a good LTV ratio?
A: Generally, an LTV of 80% or lower is considered good. The lower the LTV, the better the mortgage terms you're likely to receive.

Q2: How does LTV affect mortgage rates?
A: Lower LTV ratios typically qualify for lower interest rates because they represent less risk to the lender.

Q3: Can I get a mortgage with a high LTV?
A: Yes, but high LTV mortgages (above 80%) usually come with higher interest rates and may require mortgage insurance.

Q4: How can I lower my LTV ratio?
A: You can lower your LTV by making a larger down payment, choosing a less expensive property, or waiting for property values to increase.

Q5: Does LTV affect remortgaging?
A: Yes, your LTV ratio when remortgaging will affect the interest rates and deals available to you, just like with a new mortgage.