![]() ![]() Just remember that the lower your LTV ratio is, the lower your perceived risk and so, the lower your monthly repayments.īut a high LTV isn’t the end of the world. There isn’t really a simple answer to this, as it’s the lender who will decide whether your loan-to-value ratio puts you in their good books. What is a good loan-to-value ratio in the UK? Just bear in mind that the housing market can go both up and down, so look out for any fluctuations that may impact your LTV for selling or remortgaging. Your home’s LTV ratio will continue to change as you pay off the loan and the property value changes. This means that your LTV is 75% and your deposit (or equity) is 25% (£75,000). Multiply 0.75 by 100 and the result is 75. Multiply that number by 100 to determine the percentage.įor example, if your mortgage amount is £225,000 and your property value is £300,000, when you divide £225,000 by £300,000 you get 0.75.Divide your mortgage amount by the value of your home.Find out the current value of your home.To calculate the loan-to-value on a property you are wanting to buy or your current home, you need to follow these steps: LTV is a percentage figure that reflects the proportion of your home that is mortgaged and your equity. How to calculate your loan-to-value ratio Those with a lower LTV pose less risk to the lender as you’ve invested more of your own money, giving you access to a wider range of options and better mortgage terms - including lower interest rates. ![]() For this reason, you’ll find mortgage rates are significantly less competitive if you have a high LTV, with higher interest rates and even fees. If your property’s value drops below the value of your mortgage, or you default on your repayments, the lender stands to make a loss. The higher your LTV, the higher the risk is for the lender. ![]() Lenders can also use loan-to-value ratio for other types of secured loan, but it’s most commonly applied to mortgages. Then, your equity – the amount you own – would be £75,000. So, if your property is worth £300,000 and your mortgage is £225,000, the LTV would be 75%. These include things like your deposit size, income, credit history, and importantly, your LTV. When you apply for a mortgage, lenders will look at a set of criteria as they assess your application and potentially give you an offer. Loan-to-value is the maximum amount a mortgage lender will consider loaning to you, as a percentage of the property in question.
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