This loan to value calculator helps you calculate the equity that you have based on your property value and the deposit amount that you are going to put down.
What is loan to value?
The loan to value (LTV) ratio is the size of your mortgage compared to the value of the property that you are purchasing or currently have. The loan to value is expressed as a percentage which can be calculated by dividing the loan on your home by the property value. For example, if you want to purchase a £500,000 home and have a £50,000 down payment you loan to value ratio would be 90% [(£500,000 - £50,000) / £500,000]. This would mean that a lender would have to loan you £450,000 which would mean you have a 90% loan-to-value mortgage.
What is a good loan to value (LTV) ratio?
A lower loan to value ratio means that you will require a smaller mortgage in relation to the value of the property that you are purchasing. This means that a lower LTV ratio exposes lenders to less risk which typically means they will offer you better mortgage rates. You can use this mortgage rate calculator to see the impact mortgage rates have on the monthly payments.
To calculate the loan to value ratio on a remortgage you will use the amount you still owe on your mortgage and divide that by the current value of your home.
The formula for calculating loan to value (LTV) ratio is as follows:
- Loan to value (LTV) ratio = [(Loan Amount / Property Value) X 100]