Loan to Value (LTV)
Quick answer
The size of a mortgage expressed as a percentage of the property’s value. A £150,000 loan on a £200,000 property is 75% LTV. Buy-to-let lending is usually capped around 75–80% LTV, and lower LTVs unlock better interest rates.
At a glance
- Formula
- Loan ÷ property value
- BTL cap
- Typically 75–80% LTV
Full guide
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Open full guideWhy Loan to Value (LTV) matters for landlords
LTV drives both how much deposit you need and the rate you pay: the gap between a 75% and a 60% buy-to-let product can be significant over a five-year fix. At remortgage, a fall in the property’s value pushes your LTV up and can move you into a worse rate band or fail the lender’s criteria entirely. Watching LTV across a portfolio is central to managing refinance risk.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Mortgage Interest Tax Credit (Section 24)
The 20% basic-rate tax credit that replaced full mortgage interest deduction for individual UK landlords under section 24 of the Finance (No.2) Act 2015. From 6 April 2020, finance costs (mortgage interest, loan interest, mortgage broker fees) are no longer deductible from rental profits; instead HMRC gives a tax reducer at the basic rate, capped at the lower of finance costs, property profits or adjusted total income after personal allowance. Higher- and additional-rate taxpayers are materially worse off than pre-2017; Limited Company landlords are unaffected because Ltd interest remains a fully deductible business expense.
Buy-to-Let Mortgage
A mortgage designed for a property bought to rent out rather than live in. Lending is assessed mainly on the rent the property will produce, not just the borrower’s salary, and most are interest-only. Deposits are larger than for a residential mortgage — typically at least 20–25% — and the interest is relieved only as a 20% tax credit under Section 24.
Consent to Let
Written permission from a residential mortgage lender allowing the owner to let out a home bought on an owner-occupier mortgage, without switching to a buy-to-let product. Usually granted for a limited period (often 6–12 months) and sometimes with a rate uplift. Letting without it breaches the mortgage terms and can, in principle, let the lender demand full repayment.
Interest Coverage Ratio (ICR)
The rental stress test buy-to-let lenders use to decide how much they will lend. It measures whether the rent covers the mortgage interest by a required margin — commonly 125% for basic-rate borrowers and 145% for higher-rate borrowers — tested at a notional stressed interest rate rather than the actual pay rate.
Interest-Only Mortgage
A mortgage where the monthly payment covers only the interest, leaving the original capital to be repaid at the end of the term. Most buy-to-let mortgages are interest-only because it maximises monthly cashflow and, historically, the tax treatment of interest. The capital must still be repaid eventually — usually by selling or remortgaging the property.
Remortgaging
Switching a mortgage to a new deal, either with the same lender (a product transfer) or a new one, usually when a fixed or tracker period ends. Landlords remortgage to avoid rolling onto the lender’s higher standard variable rate, or to release equity to fund another purchase.