Loan to Income vs Loan to Value: What’s the Difference?
- James Smith
- Sep 12
- 2 min read
If you’re starting your journey towards buying a home or remortgaging, you’ve likely come across terms like Loan to Income (LTI) and Loan to Value (LTV). While they may sound similar, they measure very different things and both are crucial in deciding how much you can borrow and what kind of mortgage you’ll be offered.
What is Loan to Income (LTI)?
Loan to Income is a calculation lenders use to work out how much you can afford to borrow based on your annual income. Most lenders will cap the amount you can borrow at around 4 to 4.5 times your income, though in some cases, particularly for high earners or specific professions, higher multiples may be considered.
For example, if you earn £40,000 a year, you might be able to borrow between £160,000 and £180,000, depending on the lender and your financial circumstances.
What is Loan to Value (LTV)?
Loan to Value refers to the size of your mortgage compared to the value of the property you’re buying. It’s expressed as a percentage. If you’re buying a £200,000 home with a £20,000 deposit, you’ll need a £180,000 mortgage, making your LTV 90%.
The lower your LTV, the better the mortgage deals you’re likely to be offered. That’s because lenders see lower LTVs as less risky.
Why Do They Matter?
Both LTI and LTV are used to determine how much you can borrow, what kind of interest rates you may be eligible for, and whether your application will be approved. A strong income but small deposit may help on the LTI front but hurt on the LTV side, and vice versa. That’s why it’s so important to understand both and how they work together.
Get Personalised Advice
Whether you’re a first-time buyer, moving home, or remortgaging, understanding your LTI and LTV position is key to finding the right mortgage.
Get in contact today to discuss your options and find out how much you could borrow. Teddy James Mortgage Solutions are an Eastbourne based mortgage advisors offering friendly, honest fee free mortgage advice. Contact Teddy James Mortgage Solutions today.