Our simple to use loan to value calculator will give you an idea of your loan to value to help you get the best mortgage deal.
Your loan to value gives you the percentage of equity you have in a property. It looks at how much your borrowing is in relation to your property value.
For example if your property is worth £400,000 and you have a deposit or equity of £40,000 you would have a 90% loan to value.
How do you calculate loan-to-value?
You can calculate your loan to value by taking the value of the property – this is the amount you are either paying for the property if you are buying it, or the amount the property is worth if you already own the property. You can have a look online at similar properties for an idea of a property value.
If you are buying a house you would deduct the amount you have for deposit from the value of the property for the mortgage amount.
When remortgaging you can look at your current mortgage balance with your lender by logging in to your online account or giving your current lender a call.
What is the best loan to value ratio? / What is a good loan to value for a mortgage?
You ideally want your loan to value to be as low as possible. For a higher deposit or more equity in the property you will have more options available as some lenders only offer mortgages at lower loan to values. When you have a lower loan to value there are also better mortgage products available so if you can increase your equity/deposit this will benefit you on the monthly payments and interest that you pay on your mortgage.
You can use our simple loan to value calculator below to work out how much deposit you require to get to the next loan to value. New products are usually available at 5% intervals.
High loan to value mortgages – what does a 90 or 95% loan to value mean?
While it is always better to have a lower loan to value, there are lots of options available at the higher loan to value brackets as well. If you only have enough deposit to put down a 5 or 10% property then you would be looking at 90 and 95% loan to value mortgages. The affordability can be a little stricter with a lower deposit but there are a lot of mainstream lenders who still offer competitive mortgage deals at the higher loan to value brackets.
If you are looking at 90 and 95% loan to value mortgages it is important to speak to a mortgage broker to ensure that you are getting the best mortgage deal. Willow Brook Mortgages have access to over 100 lenders so by speaking to one of our independent mortgage advisors they can ensure you are getting the best mortgage deal for your circumstances.
Can you buy a property without a deposit?
Yes there is a lender who has introduced mortgages for a 100% loan to value. The lender requires you to have a track record of renting a property and paying all of the household bills. They look at your income, outgoings and what you are currently paying out in rent.
The aim of a 100% mortgage is to help people who are renting a property to get on the property ladder without having to save for a deposit. A lot of people find that with their monthly outgoings and rent payment it is hard to save alongside this. This mortgage gives you the benefit of being able to use the evidence of you paying your rent on time to get a mortgage.
As there is only 1 lender currently offering a 100% mortgage their is strict criteria to meet as well. Speak to one of our specialist advisors today to check if this could be an option for you.
Loan to values for buy to let properties?
For a buy to let property you will require a minimum of 25% equity for most lenders. This equates to a 75% loan to value for buy to let properties. There are some lenders who will offer a buy to let mortgage up to 80% loan to value but this is a lot more limited.
When you are buying a buy to let property this means that you will require a deposit of 25% of the property value for most lenders to be available. Lenders will also check the rental income for the property to calculate the maximum mortgage available.
If you are looking to let out a property that you already own, you would also require 25% equity so a maximum of 75% loan to value. If you have a lower loan to value you could also look at taking some of this equity out of the property to buy another property. This is referred to as a let to buy mortgage in the mortgage world and gives you the option of turning your current home in to a buy to let property and purchase a new home to live in.
You can use our simple loan to value calculator below to work out how much equity you would need in the house to get a buy to let mortgage.