What does Loan to Value (LTV) mean?

The loan to value is a very important aspect, especially when you are taking up loans. It is generally calculated by subtracting the loan amount from the real market value of the property. Thus, if the property is valued at £200,000, and you are borrowing an amount of £100,000, and given there is no other outstanding loan taken up with your house as collateral, that would make an LTV of 50%.

This 50%LTV acts basically also as equity in your home, equity which will cover for the loss of the lender in case you default on your payments. Having such a high Loan to value, the lender will definitely agree much easier to granting you the loan, than if you had for example only 10% LTV, which is already an aspect of high risk to the lender.