What is LTV (Loan-to-Value)?
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In short: The size of your mortgage as a percentage of the property's value. Lower LTV usually means cheaper rates: pricing bands typically step at 95%, 90%, 85%, 80%, 75% and 60%.
If you buy a £250,000 home with a £200,000 mortgage, the LTV is 80%. Lenders use LTV bands to price mortgages — the gap between 90% and 60% LTV deals can be 1 percentage point or more on the rate.
When you remortgage, LTV is recalculated using either the lender's surveyor valuation or an automated valuation model. Paying down capital or rising house prices can push you into a cheaper band at remortgage.
Above 95% LTV requires specialist lenders, the Mortgage Guarantee Scheme, or family-backed products. Below 60% LTV unlocks the lender's cheapest range but the marginal savings flatten out.
Primary source: fca.org.uk MCOB