What Does LTV Mean?
LTV stands for Loan To Value.
It expresses the size of a loan as a percentage of the value of the property securing it. It is the single most commonly quoted figure in property finance, because it tells a lender how much equity sits beneath its debt — and therefore how much cushion it has if the property has to be sold.
How To Calculate LTV
Loan divided by value, multiplied by 100.
A commercial unit valued at £500,000 with a £350,000 mortgage:
£350,000 ÷ £500,000 × 100 = 70% LTV
Typical LTVs By Product
| Facility | Typical maximum LTV |
|---|---|
| Commercial mortgage, owner-occupied | 70–75% |
| Commercial mortgage, investment | 65–75% |
| Semi-commercial | 70–75% |
| Buy to let (limited company) | 75–80% |
| Bridging finance | 70–75% |
| Second charge bridging | 60–70% |
The Valuation Basis Changes Everything
LTV is only as meaningful as the value it is measured against, and lenders use different bases depending on the facility:
- OMV — open market value, assuming a normal marketing period
- FSV — forced sale value, assuming a quick disposal. Materially lower
- 180 day value — a common basis on bridging, sitting between the two
- EUV — existing use value, where a change of use is proposed
A lender offering “75% LTV” against a 180 day value may advance less in cash terms than one offering 70% against open market value. Always ask which basis is being used before comparing offers — it is one of the most common ways two quotes that look similar turn out not to be.
The other point: where a property is being bought below market value, most lenders will lend against the purchase price rather than the valuation for the first six months of ownership. See BMV.
Gross LTV And Day One LTV
On bridging finance you will see both. Day one LTV is the advance released at completion. Gross LTV includes fees and any rolled-up interest that will accrue over the term.
Because lenders cap the gross figure, rolling up interest reduces what you can actually draw on day one. A 75% gross LTV facility over twelve months with interest rolled up might release nearer 68% in cash.
LTV, LTC and LTGDV
On development finance, LTV is largely replaced by two other measures: LTC (loan to cost) and LTGDV (loan to gross development value). Lenders test both and apply whichever produces the lower figure. See GDV.
And a reminder worth keeping in mind: passing an LTV test does not mean the loan is agreed. On income-producing property, DSCR or ICR frequently caps the loan below the LTV limit.
Read more about commercial mortgages, bridging loans and development finance.
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