LTV? Love to vibe? Lost the vote? I’m confused??
LTV, or loan-to-value, is a mortgage term to measure how much money you’re borrowing compared to the value of something you’re buying, usually a property. Think of it like a percentage showing how much of the property’s cost you need to borrow from a lender.
For example, imagine you want to buy a house that costs £100,000. If you have £20,000 saved up, you would use that money as a deposit. This means you still need £80,000 to pay for the rest of the house. In this case, you’d ask a bank or another lender for a loan (mortgage) to cover the £80,000.
To find the LTV, you simply divide the amount you need to borrow (the loan) by the total cost of the house (the value). Then, multiply the result by to get a percentage.
In our example:
Loan-to-value (LTV) = (Loan Amount ÷ House Cost) x 100
LTV = (£80,000 ÷ £100,000) x 100 = 0.8 x 100 = 80%
So, the LTV in this example is 80%, which means you’re borrowing 80% of the cost of the house, and you’re using your own money to cover the other 20%.
Lenders use the LTV to help them decide how risky a loan might be; borrowing less of the property’s cost (a lower LTV) usually means the loan is less risky for the lender.
Don’t be confused by mortgages. Instead, come and have a chat with us. At largemortgageloans.com, we can simplify the jargon and secure you a great mortgage deal. Give us a call ️or drop us a message now.
