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Lenders price mortgages in LTV bands, typically 95, 90, 85, 80, 75 and 60%. Dropping into a lower band usually unlocks a cheaper rate, which is why a slightly bigger deposit can save far more than its size suggests.
What The LTV Calculator Works Out
- Loan to value: the mortgage (property value minus deposit) as a percentage of the property value. Borrow GBP 200,000 against a GBP 250,000 home and you are at 80% LTV with a 20% deposit. Most first-time buyers sit between 85% and 95%; movers and remortgagers typically 60% to 80%.
- Mortgage needed: the property value minus your deposit or equity, which is the sum you actually borrow.
- To reach the next band: the extra deposit that takes you down to the next pricing band (95, 90, 85, 80, 75 or 60%). The steepest pricing cliff is usually between 95% and 90%, the gentlest below 75%, and the best headline rates are reserved for 60% LTV, so a few thousand pounds more deposit at a band edge can save thousands over a fixed term.
- Target LTV band (advanced): pick a band and see the deposit it needs and how far short (or ahead) you are. Useful when deciding whether to wait and save or buy now.
- Surveyor down-valuation (advanced): the lender's surveyor sets the value that counts. If they value the home 5% below the agreed price, the loan stays the same but the LTV rises, which can push you into a dearer band or make the lender cut the loan. Keep contingency for this.
- Projected LTV at remortgage (advanced): runs the mortgage forward at your rate and term to find the balance left, grows the value at your assumed house price growth, and gives the LTV you would remortgage at. A borrower who started at 90% often reaches 75% pricing within five years.
- Deposit as share of price (advanced): your equity cushion. Above 100% LTV (negative equity) moving or remortgaging becomes genuinely hard, which is the risk high-LTV borrowing carries into a falling market.
- Band table (advanced): the maximum mortgage and deposit needed at every standard band for your property value, with the extra you would need to reach each one.
- Affordability is separate: LTV caps borrowing against the property; lenders also cap it against income (typically 4 to 4.5 times salary, with commitments deducted first). Passing one test does not pass the other. Not financial advice.
Source and further reading: MoneyHelper.