loan-to-value ratio mortgage options
Loan-to-value (LTV) is one of the most important concepts in mortgages, but many buyers don’t fully understand what it is or why it matters. At Oportfolio, we ensure our clients know how their deposit affects their options. There are lots of loan-to-value ratio mortgage options available, and this guide will go through what they mean for borrowers.
What Is a Loan-To-Value Ratio Mortgage?
There isn’t actually such a thing as a ‘loan-to-value mortgage’ but loan-to-value refers to the ratio of mortgage you have on a property compared to the value of the property as a whole. In this blog, we will give some examples of how this works and what having a higher or lower LTV can mean when you purchase a property. Let’s dive in.
What Is LTV?
LTV is the percentage of the property value that you’re borrowing. For example:
Property price: £400,000
Deposit: £40,000 (10%)
Mortgage: £360,000 (90% LTV)
Why Does LTV Matter?
- Lenders use LTV to assess risk. Lower LTV usually means:
- Lower interest rates
- More mortgage products available
- Better chance of approval
Higher LTV loans are still accessible, especially for first-time buyers, but they come with higher interest rates and fewer choices.
How to Lower Your LTV
- Save a bigger deposit
- Buy a less expensive property
- Increase property value through improvements
LTV Thresholds to Know
95%: Minimum deposit, typically first-time buyer loans. High rates and limited number of lenders offering this.
90%: Wider product availability but still fairly high rates due to the risk associated with high LTV lending.
75% or below: Best rates often available here.
Conclusion
Knowing your LTV helps you make smarter choices and plan ahead. At Oportfolio, we help buyers understand and optimise their LTV to secure better deals. Speak to one of our advisors today.
