LTV (Loan to Value)

LTV (Loan to Value) is the ratio of a loan to the value of the security property or asset, expressed as a percentage. A £350,000 loan secured against a property worth £500,000 has an LTV of 70%. LTV is one of the primary metrics used by secured lenders to assess risk.

Lower LTV means more equity in the property relative to the debt, which means lower risk for the lender. As a result, lower LTV typically attracts lower interest rates. Most bridging lenders will lend up to 70-75% LTV. Commercial mortgage lenders typically lend up to 70% LTV. Buy-to-let mortgage lenders commonly lend up to 75-80% LTV.

For development finance, lenders use LTGDV (against completed value) rather than day-one LTV. For asset finance, LTV is less relevant since the loan is assessed against the asset's value at the time of purchase, and lenders typically require a 10-20% deposit for older or more specialist assets.

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