The short answer
Loan-to-value, or LTV, is the mortgage divided by the property value. A £225,000 mortgage on a £250,000 home is 90% LTV and the buyer’s £25,000 deposit is 10%. Lenders commonly group products into maximum-LTV bands, so crossing a threshold can change the available range—but rates and criteria vary.
The calculation
LTV = mortgage ÷ property value × 100. If the lender values the property below the agreed price, it normally uses its valuation when assessing security. That can raise the effective LTV or require a larger cash contribution.
Why LTV affects mortgage choice
Higher LTV leaves a smaller equity cushion if prices fall or the lender must repossess and sell. Lower LTV can therefore open more products or different pricing, but it does not override affordability, credit, income or property criteria.
Do not spend every pound reaching a band
Moving from 90.1% to 89.9% LTV may matter if it crosses a lender’s band, but only an actual product comparison can show the saving. Do not leave yourself unable to pay tax, legal fees, survey costs, repairs or an emergency simply to maximise the deposit.
Worked example
On a £300,000 home, a £30,000 deposit means borrowing £270,000 at 90% LTV. Increasing the deposit to £45,000 means borrowing £255,000 at 85% LTV. Even before any rate difference, the second buyer owes £15,000 less. Use the mortgage calculator to compare both scenarios.
Deposit source and evidence
Lenders and conveyancers normally need evidence of where deposit money came from. Gifted deposits, overseas funds, sale proceeds and Lifetime ISA withdrawals have their own documentation or timing. Explain the source early rather than moving money repeatedly between accounts.
Sources and limitations
MoneyHelper explains mortgage deposits and LTV and saving for a deposit. No universal LTV band guarantees a particular rate or acceptance. Send corrections to hello@propertiesandhomes.co.uk.
Reviewed by the Properties & Homes editorial team
Published and last reviewed: 14 August 2026.
Change log: first edition.