Loan-to-value (LTV) proportion try lots lenders use to determine how far chance they’re taking on a mortgage. An inferior financing is going to be a reduced amount of a danger so you can an excellent financial.
Which have a reduced LTV may replace your cost getting a great mortgage since the quantity of loan you prefer in comparison with the value of our home is lower.
Imagine if we wish to buy property well worth ?2 hundred,000. The minimum deposit you’ll need is 5% (?ten,000), however, a beneficial chunkier put may help you access best profit and by having way more collateral upfront, your reduce your financing-to-well worth proportion otherwise LTV.