Loan To Value (LTV) Calculator

What is Loan-to-Value (LTV)?

Loan to value (LTV) is the percentage of a property’s value that a lender will finance with a loan, such as a bridging loan. It measures the ratio of the loan amount to the property’s total value. LTV is one of the key factors lenders consider when assessing the risk of a loan.

Example: If a property is worth £200,000 and you borrow £150,000, the LTV is 75%.

A higher LTV means a larger portion of the property is being financed, which increases lender risk. Conversely, a lower LTV indicates you have more equity in the property and reduces lending risk. Understanding LTV helps you plan your borrowing and deposit requirements effectively.

How to calculate loan to value

Your loan to value (LTV) ratio shows how much of a property’s value you’re borrowing. Simply divide the loan amount by the property value and multiply by 100.

Formula: LTV (%) = Loan Amount ÷ Property Value × 100
Example: £150,000 (Loan Amount) ÷ £200,000 (Property Value) × 100 = 75% LTV

This calculation helps you see how much of the property is financed by the lender and how much deposit you will need. Using our LTV calculator can make this process quick and easy.

Why is LTV important?

LTV is crucial because it influences both lender decisions and borrowing costs:

• Risk Assessment: Lower LTVs are less risky for lenders, improving your chances of approval.
• Interest Rates: High LTV loans may carry higher rates, while lower LTV loans often benefit from better terms.
• Borrowing Limits: Lenders use LTV to determine how much they are willing to lend.

For borrowers, understanding LTV ensures you stay within lender limits and avoid overextending financially.

What is a good LTV ratio?

Loan to value (LTV) ratio is a key factor lenders consider when assessing risk. Generally, the lower the LTV, the safer the loan appears to the lender, while higher LTVs carry greater risk. Here’s a typical breakdown for bridging loans:

50–60% LTV	🟢 Low risk	Easier to secure and lower interest rates
60–70% LTV	🟡 Moderate risk	Standard bridging loan range
70–75% LTV	🔴 Higher risk	Usually the maximum for bridging loans

Most bridging lenders set their maximum LTV at around 75% to keep the loan manageable for both borrower and lender. Staying below this threshold can improve your chances of approval, potentially reduce costs, and give you more flexibility when negotiating terms.

How does LTV affect deposit requirements?

The deposit is the portion of the property value not covered by the loan. For instance, a 70% LTV means a 30% deposit is needed. The higher the LTV, the smaller your deposit, but the greater the risk and potentially higher interest rate.

Here’s how this looks in practice based on a £300,000 property:

LTV (%)	Loan Amount	Deposit Required
75%	£225,000	£75,000
70%	£210,000	£90,000
65%	£195,000	£105,000
60%	£180,000	£120,000

What is the maximum LTV for a bridging loan?

Bridging loans are typically capped at 75% LTV. This ensures lenders maintain a significant safety margin in case property values fluctuate. Staying within this limit is essential for loan approval and often results in more favourable borrowing terms.

Does LTV affect the interest rate?

Absolutely. Higher LTVs are considered riskier for lenders, so interest rates are usually higher. Conversely, a lower LTV signals less risk, which may lead to better rates and terms.

For bridging finance, maintaining an LTV below 75% is usually recommended to secure the most competitive rates and avoid overextending financially.

Is LTV for bridging finance calculated on GDV?

No, Loan-to-Value (LTV) for bridging finance is usually calculated against the current property value, not the Gross Development Value (GDV).

LTV represents the percentage of the property’s present market value that a lender is willing to lend. For example, if a property is worth £1,000,000 and the lender offers 70% LTV, the maximum loan would typically be £700,000.

However, in some development or heavy refurbishment bridging loans, lenders may consider Loan-to-GDV (LTGDV) instead. This measures the loan against the projected value of the property once works are completed.