Loan to value is the ratio between your mortgage debt and your property's value, expressed as a percentage.
LTV = outstanding balance / property value × 100%
With €296,121 outstanding on a €480,000 property, your LTV is 61.7%.
That figure does more than you'd think. Lenders sort mortgages into risk bands based on LTV, and each band carries an interest surcharge. Drop below a threshold and you can request reclassification into a lower band, lowering your monthly payment without changing anything else.
How to calculate it
You need two figures, and both are commonly got wrong.
Your outstanding balance. Not your original mortgage, but what's still owed. If your mortgage consists of several parts, add them together. An annuity part is partly repaid; an interest-only part isn't.
Your property value. Not your purchase price and not the municipal valuation. You need current market value. The municipal valuation has a reference date of 1 January of the preceding year and lags structurally in a rising market.
How to establish both is worked through in the article on home equity.
Where the thresholds sit
Risk bands vary by lender, but the thresholds typically sit around these levels:
| LTV | Meaning |
|---|---|
| Above 90% | Highest surcharge |
| 80 to 90% | |
| 67 to 80% | |
| 60 to 67% | |
| Below 60% | Lowest surcharge |
Some lenders have more or fewer, and not everyone places the thresholds identically. Check your mortgage terms or ask your lender; it's one phone call.
With a government-guaranteed mortgage this doesn't apply: one rate regardless of LTV.
What a lower band earns you
Here's the reason to track this. What a rate discount is worth annually, depending on your outstanding balance:
| Outstanding | 0.10% discount | 0.20% | 0.30% | 0.50% |
|---|---|---|---|---|
| €200,000 | €200 | €400 | €600 | €1,000 |
| €250,000 | €250 | €500 | €750 | €1,250 |
| €300,000 | €300 | €600 | €900 | €1,500 |
| €400,000 | €400 | €800 | €1,200 | €2,000 |
| €500,000 | €500 | €1,000 | €1,500 | €2,500 |
Across a full fixed-rate period that accumulates:
| €300,000 outstanding | Over 5 years | Over 10 years | Over 20 years |
|---|---|---|---|
| 0.20% discount | €3,000 | €6,000 | €12,000 |
| 0.30% discount | €4,500 | €9,000 | €18,000 |
| 0.50% discount | €7,500 | €15,000 | €30,000 |
Thirty thousand euros for a request you can make by email. That's the upper end and it gives the order of magnitude.
Your LTV falls two ways
This is what people miss, and it's why you can cross a threshold without noticing.
Through repayment. Your balance falls, so the numerator shrinks. With an annuity mortgage that accelerates each year, because the repayment portion of your payment grows.
Through appreciation. Your property value rises, so the denominator grows. You need do nothing for that.
Worked through for our example property, at 61.7% with the 60% threshold in sight:
| Route | After 1 year | After 2 years | After 3 years |
|---|---|---|---|
| Payments only | 60.3% | 58.8% | 57.4% |
| 2% appreciation only | 60.5% | 59.3% | 58.1% |
| Both together | 59.1% | 56.6% | 54.1% |
With ordinary payments and modest appreciation you're below the threshold within a year. And your lender won't mention it.
Repaying extra to slip below a threshold
Sometimes you're just above one. Then the question is whether repaying the difference pays off.
For the example property: to get below 60%, your balance must fall under €288,000. You're at €296,121, so you need €8,121.
Or from the other side: your property must be worth more than €493,535, an increase of €13,535.
Whether that pays depends on the discount your lender offers. At a 0.20% discount on €288,000 that's €576 a year, which on an €8,121 repayment works out at a return above seven percent. Considerably more than a savings account.
Watch your penalty-free allowance. Most lenders let you repay a percentage of the original principal annually without penalty, usually 10%, and that applies per loan part. Repay more and a penalty may be charged.
How to request it
Three steps, and it costs you an afternoon.
Evidence your property value. Most lenders accept a valuation report, costing a few hundred euros. Some accept a municipal valuation or a validated desktop report, which is considerably cheaper. Ask what they accept before hiring a valuer.
Submit the request. Many lenders allow this online or by email. Explicitly ask for reclassification into a lower risk band.
Check the result. The adjustment usually takes effect from the next payment, not retroactively. Waiting therefore costs you money.
Important: this differs from refinancing. Your mortgage stays the same; only the surcharge changes. No new income assessment and no notary.
LTV on a new purchase
For buyers it works the other way: LTV becomes a limit rather than an opportunity.
You may borrow at most a hundred percent of the property value. Purchase costs, roughly six percent of the price, must therefore come from your own funds.
| Property price | Maximum mortgage | To bring yourself |
|---|---|---|
| €300,000 | €300,000 | roughly €18,000 |
| €400,000 | €400,000 | roughly €24,000 |
| €500,000 | €500,000 | roughly €30,000 |
Bring more of your own money and you start at a lower LTV, therefore immediately in a more favourable band. That's one of the few places where your own contribution produces a direct return in the form of a lower rate.
What LTV doesn't say
It says nothing about your monthly payment. Two people with the same LTV can have entirely different payments, depending on repayment type and rate.
It says nothing about your wealth. A low LTV on a cheap property is less equity than a high LTV on an expensive one.
It's a snapshot based on an estimate. Your property value isn't a fact until you sell.
How Gylder fits in
The problem with LTV isn't the calculation but the tracking. Both figures move continuously, and you don't notice.
Gylder models your mortgage as it's actually built: multiple loan parts, each with its own repayment type, rate, term and penalty-free allowance. Your outstanding balance is computed from that continuously, per part.
Your property value moves between your own valuations using the official house-price index for your region. That keeps your LTV right in the years you enter nothing.
And there's a signal when you approach a threshold. That's precisely the moment a request to your lender earns money, and the moment almost nobody thinks of it.
What this doesn't tell you
Thresholds vary by lender. The levels here are common but not universal. Your terms are what count.
Discounts vary too. The percentages in the tables are worked examples, not offers. Ask what your lender offers between bands.
With a government-guaranteed mortgage this doesn't apply. One rate regardless of LTV.
This isn't advice. Whether repaying extra suits your situation depends on your rate, your penalty-free allowance and what else you'd do with the money.
Frequently asked questions
What is loan to value? Your mortgage debt divided by your property's value, as a percentage. At €296,121 of debt on a €480,000 property, that's 61.7%.
Why does my LTV matter? Lenders set your interest surcharge based on it. Drop below a threshold and you can request a lower surcharge.
Where do the thresholds sit? Typically around 90%, 80%, 67% and 60% of property value, though this varies by lender.
What does a lower risk band earn? At €300,000 outstanding and a 0.30% discount, €900 a year and €18,000 over twenty years.
Do I need a valuation? Often yes, but ask what your lender accepts first. Some take a municipal valuation or a cheaper desktop report.