What is a loan to value ratio?
Your loan to value (LTV) ratio shows how much you can borrow on a mortgage compared to the total value of a property. So, if you’re looking to buy a £200,000 property, a £20,000 deposit is 10% of the price – so your mortgage will be £180,000. That makes your LTV 90%.
Lenders tend to have a maximum LTV ratio they’ll offer a customer. Generally, the lower your LTV, the lower a rate of interest you could be charged. The cheapest rates are typically available for people with a 40% deposit or more.