Loan to Income vs Loan to Value: What’s the Difference?
Starting a home-buying or remortgage journey means bumping into two similar-sounding terms—LTI and LTV—that measure very different things. Understanding both helps you see how much you can borrow and the kind of mortgage you may be offered.
What Is Loan to Income (LTI)?
LTI assesses affordability based on annual income. Many lenders cap borrowing around 4 to 4.5 times income, with higher multiples sometimes available for specific professions or higher earners.
Example: On a £40,000 income, you might borrow roughly £160,000–£180,000, depending on lender and personal circumstances.
What Is Loan to Value (LTV)?
LTV compares the size of your mortgage to the property’s value. It’s expressed as a percentage.
Example: Buy at £200,000 with a £20,000 deposit; the £180,000 mortgage gives a 90% LTV. Lower LTVs are usually rewarded with better rates because the risk to lenders is lower.
Why Both Matter
LTI and LTV together shape how much you can borrow, potential rates, and approval chances. A strong income with a small deposit may work for LTI but strain LTV, and vice versa. Knowing both gives a clearer path to the right deal.
Next step: Get personalised advice to understand your LTI/LTV position and how much you could borrow.