LTV Bands Explained: Why a Slightly Bigger Deposit Can Save You Thousands

LTV — loan-to-value — is simply the percentage of the property's price you're borrowing. Buy a £300,000 home with a £30,000 deposit and you're borrowing £270,000: that's 90% LTV. Simple enough. The important part is how lenders use it to price your mortgage.

Lenders price in bands, not smoothly

Mortgage rates don't improve gradually as your deposit grows — they jump in steps. The main bands are typically 95%, 90%, 85%, 75% and 60% LTV. Cross a boundary and a whole shelf of cheaper products opens up. Stay just above one and you pay more than you need to.

The 'just over the line' problem

Here's where it gets interesting. Say you're buying at £300,000 with a £29,000 deposit — that's 90.3% LTV, so you're in the 95% band with the most expensive rates. Find another £1,000 and you drop to 90% LTV, unlocking noticeably cheaper deals. That extra £1,000 could save you far more than £1,000 in interest over the deal.

• 95% LTV (5% deposit): available, backed by the permanent mortgage guarantee scheme, but the priciest rates
• 90% LTV: a meaningful step down in rate
• 85% and 75% LTV: where rates get genuinely competitive
• 60% LTV: the cheapest rates on the market — below this, improvements are small

Where the extra money can come from

• A gifted deposit from family (with a signed gift letter)
• A Lifetime ISA bonus if you're a first-time buyer
• Negotiating the purchase price down — a lower price can shift your LTV band without a bigger deposit
• Timing: saving a few more months can be worth it if it crosses a band

It matters at remortgage time too

If your home has risen in value or you've paid down the balance, you may have dropped into a lower LTV band without realising — which is one reason remortgaging can unlock much better rates. A small overpayment before remortgaging can sometimes tip you over a boundary.