Loan-to-Value Guide – Loan-to-value is one of the first figures a lender, broker or adviser will consider when reviewing a mortgage case. It helps show how much a client wants to borrow relative to the property’s value or purchase price.

For mortgage brokers, loan-to-value is more than a simple percentage. It can affect lender choice, affordability, product availability, interest rates, underwriting strength, deposit requirements and how a case should be packaged.

This guide explains what loan-to-value means, how it is calculated, why it matters, and how brokers can use it to place cases more effectively across residential, buy-to-let, commercial and specialist mortgage scenarios.

Connect supports mortgage advisers through a complete network model. This means advisers can access mainstream mortgage support, specialist lending knowledge, compliance guidance, packaging support, technology, training and business development resources in one place.

Join Connect Network if you are an experienced broker looking for a network that supports both mainstream and specialist advice.

What Does loan-to-Value mean?

Loan-to-value, often abbreviated as LTV, is the percentage of a property’s value that is borrowed through a mortgage or secured loan.

For example, if a client is buying a property worth £300,000 and needs a £240,000 mortgage, the loan-to-value ratio is 80%.

The remaining 20% usually comes from the client’s deposit, equity, or another acceptable source of funds.

How to Calculate Loan-to-Value

To calculate the loan-to-value ratio, divide the mortgage amount by the property value, then multiply by 100.

Loan amount ÷ property value x 100 = loan-to-value percentage

Example

Property value: £300,000
Mortgage amount: £240,000
Calculation: £240,000 ÷ £300,000 x 100
Loan to value: 80%

This means the borrower is asking the lender to provide 80% of the property’s value, with the remaining 20% covered by a deposit or equity.

Why Loan-to-Value Matters

Loan-to-value matters because it helps lenders measure risk. A lower LTV usually means the borrower has more deposit or equity in the property. A higher LTV usually means the lender is taking a larger share of the property risk.

This can influence:

• Which lenders may consider the case
• Which mortgage products may be available
• The interest rate offered
• Whether the case needs stronger supporting evidence
• How much deposit or equity is required
• The level of underwriting scrutiny
• Whether specialist lender support may be needed

For brokers, understanding LTV helps shape the advice journey from the first client conversation. It can also help identify whether a case is likely to fit a mainstream lender, a specialist lender, or a more detailed packaging route.

Quick LTV Guide for Mortgage Clients and Brokers

Loan-to-value	What it usually means	Broker consideration
60% LTV or below	Lower borrowing compared with property value	Often stronger lender choice, subject to criteria
61% to 75% LTV	Moderate borrowing level	Common range for many residential and buy-to-let cases
76% to 85% LTV	Higher borrowing level	Product choice may narrow and criteria becomes more important
86% to 90% LTV	High loan-to-value	Deposit source, credit profile and affordability become key
91% to 95% LTV	Very high loan to value	Usually requires careful lender selection and strong case preparation

These bands are a guide only. Lender criteria, affordability, property type, credit history, income structure and market conditions can all affect what may be available.

What Affects the Loan-to-Value Ratio?

Loan-to-value is shaped by two main figures: the property value and the loan amount. However, how lenders assess LTV can vary by case.

Key factors include:

• The agreed purchase price
• The lender’s valuation
• The borrower’s deposit
• Existing equity for remortgage cases
• Additional borrowing requirements
• Property type and condition
• Whether the property is residential, buy-to-let, commercial or mixed-use
• Whether the application is personal or through a limited company
• The client’s credit profile
• The client’s income and affordability position

A case that appears simple at 75% LTV may still require specialist attention if the property type, income structure, or credit profile falls outside standard criteria.

Loan-to-Value on a Purchase

For a purchase, LTV is usually based on the property price or valuation, depending on lender policy. If the valuation is lower than the agreed purchase price, the lender may base the LTV on the lower figure.

This can affect how much the client can borrow and whether the deposit needs to increase.

Purchase example

A client agrees to buy a property for £400,000 and wants to borrow £340,000.

£340,000 ÷ £400,000 x 100 = 85% LTV

If the lender values the property at £380,000 instead, the same £340,000 loan would represent a higher LTV.

£340,000 ÷ £380,000 x 100 = 89.47% LTV

This may move the case into a different product range or affect whether the original loan amount is available.

Loan-to-value on a remortgage

For a remortgage, LTV is usually based on the current property value and the mortgage balance the client wants to arrange.

This can include the existing mortgage balance only, or additional borrowing if the client wants to raise funds.

Remortgage example

Current property value: £500,000
New mortgage amount: £300,000
LTV: 60%

If the client wants to raise an additional £75,000, the new mortgage amount becomes £375,000.

£375,000 ÷ £500,000 x 100 = 75% LTV

This shows why additional borrowing can change product availability and lender choice.

Loan-to-Value for Buy-to-Let Mortgages

Loan-to-value is especially important in buy-to-let cases because lenders may also assess rental income, stress-testing, landlord experience, property type, and ownership structure.

A buy-to-let case at a moderate LTV can still be complex if rental income does not meet the lender’s calculations or if the property is an HMO, a multi-unit block, a holiday let, or a limited company purchase.

Brokers should consider:

• Deposit size
• Rental income
• Interest coverage ratio
• Personal income requirements
• Landlord experience
• Property type
• Limited company structure
• Portfolio background

For advisers handling landlord cases, access to a wider lender panel can make a major difference. Connect’s All Lenders and Providers page supports the wider network journey by showing the breadth of lender and provider access available through Connect.

Loan-to-Value for Commercial Mortgages

Commercial mortgage LTV can depend on the property, business, lease terms, trading history, repayment strategy and lender appetite.

A commercial case may involve:

• Owner-occupied premises
• Commercial investment property
• Semi-commercial property
• Business trading accounts
• Lease income
• Property condition
• Sector-specific risk
• Exit strategy

Commercial cases often need more interpretation than standard residential cases. This is where experienced brokers benefit from a network that can support both mainstream and specialist lending routes.

Connect is not only a specialist network. It is a comprehensive mortgage and protection network designed to support advisers across residential, buy-to-let, commercial, bridging, second-charge, protection, and general insurance opportunities.

Loan-to-Value for Bridging Finance

In bridging finance, LTV is often assessed alongside the exit strategy. The lender wants to understand how the loan will be repaid, whether through sale, refinance, development exit, retained funds, or another acceptable route.

Important factors include:

• Gross loan amount
• Net loan amount
• Rolled-up interest
• Fees added to the loan
• Property value
• Valuation basis
• Exit route
• Timescale
• Refurbishment or development plans

A bridging case may appear acceptable at headline LTV, but fees, interest and valuation method can change the real risk position. Brokers need to understand whether a lender is calculating LTV on the gross loan, the net loan, the day-one advance, or the total facility.

Loan-to-Value for Second Charge Mortgages

Second charge LTV can be calculated by looking at the total borrowing secured against the property.

This usually means combining the first charge mortgage balance with the proposed second charge loan.

Second charge example

Property value: £400,000
First mortgage balance: £220,000
Second charge loan: £60,000
Total secured borrowing: £280,000
Combined LTV: 70%

Second charge cases require careful checks around affordability, credit commitments, property value and the reason for borrowing.

Why Lower LTV Can Improve Product Choice

A lower LTV can reduce risk for the lender. This may improve access to products, although it does not guarantee approval.

Lower LTV may help when:

• The client has a larger deposit
• The client has built up equity
• The remortgage balance has reduced
• The property value has increased
• Additional borrowing is limited
• The case fits standard affordability rules

However, LTV is only one part of the assessment. A low LTV case can still be declined if income, credit, property type or documentation does not meet lender criteria.

Why High LTV Cases Need Careful Preparation

High LTV cases often require stronger preparation because there is less equity in the property. Lenders may look more closely at affordability, income stability, credit conduct and deposit source.

For brokers, high-LTV cases should be clearly packaged from the start.

A strong high LTV submission may include:

• Clear income evidence
• Accurate affordability assessment
• Deposit source confirmation
• Explanation of credit history where relevant
• Property details
• Notes on any unusual case features
• Evidence that the client understands costs and commitments

Connect’s Adviser Services explain how referral, packaging and support options can help advisers manage different client needs while keeping the advice journey clear and compliant.

How Brokers Should use LTV during client conversations

Loan-to-value should be discussed early. It helps set expectations before a client becomes fixed on a product, rate or lender.

Brokers can use LTV to explain:

• Why deposit size matters
• Why property valuation matters
• Why a lower rate may not be available
• Why affordability still matters even with strong equity
• Why specialist lender support may be needed
• Why documentation must be accurate
• Why the final lender valuation can change the outcome

This helps clients understand the process and reduces the risk of confusion later.

LTV is Not The Same as Affordability

The loan-to-value ratio compares the loan amount to the property’s value. Affordability looks at whether the client can reasonably afford the mortgage.

A client may have a strong deposit and low LTV but still fail affordability. Another client may pass on affordability but need a higher-LTV product.

Lenders usually assess both.

For brokers, the best outcomes often come from reviewing LTV, affordability, property type, credit profile and lender criteria together.

LTV is Not The Only Measure of Risk

LTV is important, but it should not be treated as the whole case.

A lender may also consider:

• Income type
• Employment status
• Credit history
• Existing debts
• Dependants
• Property type
• Lease length
• Deposit source
• Repayment method
• Loan purpose
• Adviser notes
• Supporting documents

This is why brokers need more than a lender list. They need a network that understands how a case fits together.

How Connect Supports Brokers with LTV-led Cases

Connect supports advisers across mainstream and specialist mortgage areas. This means a broker can discuss cases that may involve standard residential lending, buy-to-let, commercial mortgages, bridging finance, second charges, protection and general insurance.

For experienced brokers, this complete network model can help when a client’s needs do not sit neatly in one category.

A client may start with a standard remortgage enquiry, but the wider picture may include:

• Additional borrowing
• Buy-to-let investment
• Commercial property plans
• Protection needs
• General insurance requirements
• A future limited company structure
• A short-term finance requirement
• A referral opportunity

A complete network helps brokers think beyond a single product and support clients throughout a broader financial journey.

If you are already advising and reviewing your next network move, read our guide to Switching Mortgage Networks.

 

How Connect Experts supports the adviser journey

A strong network should help brokers build visibility as well as place cases. Connect Experts is part of that wider journey.

Clients can use the find a mortgage adviser service to search for advisers by location, mortgage type and other preferences. This supports consumer choice while helping advisers improve their online presence.

The Connect Experts mortgage adviser directory also strengthens the wider Connect ecosystem by connecting clients with advisers across different mortgage needs.

For brokers considering a network move, this shows how Connect supports both case placement and adviser visibility.

When Specialist Packaging May Help

Some LTV-led cases need additional support because they are more complex than the percentage suggests.

Packaging support may help where there is:

• A complex buy-to-let case
• A commercial or semi-commercial property
• A bridging finance enquiry
• Non-standard income
• Adverse credit
• A tight completion deadline
• A limited company application
• A property that needs more explanation
• A lender that requires detailed supporting notes

Connect’s Specialist Mortgage Packagers for DA Brokers guide explains how specialist packaging can help directly authorised brokers manage more complex cases while retaining client control.

Broker Checklist for LTV Cases

Before submitting a case, brokers should check:

• Has the correct property value been used?
• Is the LTV based on purchase price or valuation?
• Is the loan amount accurate?
• Are fees being added to the loan?
• Is the client raising additional funds?
• Is the deposit source clear?
• Is the property type acceptable to the lender?
• Does the case pass affordability?
• Are there any credit issues?
• Does the lender support the required product type?
• Is the case mainstream, specialist, or suitable for packaging?
• Are adviser notes clear enough for the underwriter?

This checklist helps keep the case focused and reduces the chance of delays.

Frequently asked questions

Question	Answer
What is loan to value?	Loan to value is the percentage of the property value that is being borrowed. If a client buys a £300,000 property with a £240,000 mortgage, the loan to value is 80%.
How do you calculate LTV?	Divide the mortgage amount by the property value, then multiply by 100. For example, £240,000 divided by £300,000 equals 0.8. Multiplied by 100, this gives an LTV of 80%.
Why does LTV matter for mortgages?	LTV matters because it helps lenders assess risk. It can affect product availability, interest rates, deposit requirements and whether the case fits lender criteria.
Is a lower LTV better?	A lower LTV can improve product choice because the borrower has more deposit or equity. However, lenders still assess affordability, credit history, income and property type.
Can a high LTV mortgage be approved?	A high LTV mortgage may be possible, subject to lender criteria, affordability, credit profile, deposit source and property valuation. High LTV cases often need careful preparation.
Does LTV affect buy-to-let mortgages?	Yes. Buy-to-let lenders consider LTV alongside rental income, stress testing, landlord experience, property type and ownership structure.
Does LTV matter for commercial mortgages?	Yes. Commercial mortgage lenders may assess LTV alongside business performance, lease terms, property type, repayment strategy and sector risk.
What is combined LTV?	Combined LTV is often used when more than one loan is secured against the property. It combines the first charge and second charge borrowing, then compares the total with the property value.
Why should brokers review LTV early?	Brokers should review LTV early because it helps shape lender choice, product availability, client expectations and case packaging.
How can Connect help brokers with LTV-led cases?	Connect supports brokers with access to mainstream and specialist lending routes, adviser services, packaging support, compliance guidance, technology, training and business growth support through a complete UK mortgage and protection network.
Speak to Connect about network support	Loan to value is a simple calculation, but the advice journey around it can be complex. The right network support helps brokers understand lender appetite, package cases clearly and serve clients across a wider range of mortgage and protection needs. If you are an experienced broker looking for a complete network that supports mainstream lending, specialist finance, compliance, technology, adviser development and business growth, explore how to Join Con