Loan-to-Value (LTV) Calculator

What is loan-to-value (LTV)?

Loan-to-value measures the amount of debt secured against a property compared with the property's current value. It is expressed as a percentage and is one of the key metrics used by lenders when assessing mortgage applications and risk.

How is LTV calculated?

LTV is calculated by dividing the outstanding loan balance by the property value, then multiplying by 100.

What does LTV tell a property owner?

LTV provides a snapshot of how highly leveraged a property is. For portfolio landlords, maintaining an acceptable LTV is important when acquiring new properties or refinancing existing ones.

Because LTV relies on the current value of the property, not just the original purchase price, the LTV percentage will change if the property's market value rises or falls — even if no capital is repaid on the mortgage.

LTV and property equity

Property equity is the portion of the property's value that is not encumbered by the mortgage. LTV and equity percentage will always add up to 100%. If a property has a 60% LTV, the owner has 40% gross equity.

As capital is repaid, or if the property value increases, the LTV decreases and the equity increases. Conversely, if the property value falls, the LTV increases and the equity is reduced.

What LTV does not tell you

While a lower LTV often provides access to more mortgage products and better interest rates, LTV alone does not guarantee financing. Lenders use varied criteria when assessing applications, including:

• rental income and coverage ratios;
• borrower affordability and income;
• credit history;
• the property's condition and type;
• wider portfolio leverage (for portfolio landlords).

For more context on managing leverage across multiple properties, read our guide to property portfolio LTV, or estimate borrowing costs with the mortgage payment calculator.