Loan to Value (LTV)
What is loan to value (or LTV)?
Loan to value is the percentage of loan, normally a mortgage, compared to the value of the property.
For example a £75,000 mortgage on a property with a value of £100,000 would be a 75% loan to value.
Mortgage lenders often use LTV to restrict the maximum amount they will lend against a property.
How do you calculate loan to value (LTV)?
([mortgage value] / [property value]) * 100 = LTV
(£90,000 / £120,000) * 100 = 75%
Another common LTV calculation you might want to do is to find out how much you can borrow, given the property value and a maximum allowed LTV. This is a standard percentage calculation as follows:
([maximum LTV] / 100) * [property value] = [maximum mortgage]
For example (with an 80% LTV limit):
(80 / 100) * £120,000 = 0.8 * 120000 = £96,000
You can use the free PaTMa buy-to-let calculator to calculate and show LTV limits for you.