LTV Calculator: Loan-to-Value Explained
1. Short answer
LTV (loan-to-value) is the outstanding loan divided by the property's value, as a percentage. It says what share of the property was paid for with borrowed money.
LTV = (loan amount ÷ property value) × 100%
A € 199,500 loan on a € 285,000 property gives an LTV of 70%. Watch the denominator: that is value, not your total investment. This makes LTV fundamentally different from gross and net yield, which do use total investment.
2. What LTV is, and what it is not
LTV is a risk measure, not a return measure. It says nothing about what a property earns; it says how much buffer sits between the loan and the value. For a lender that is the central question: in a forced sale, the proceeds must cover the loan.
Two things that are often conflated:
- LTV is not your equity share. At 70% LTV you have not put in 30%. Lenders usually do not finance transfer tax and acquisition costs, so your own contribution is proportionally larger. See the worked example.
- Value is not the purchase price. A lender uses the appraised value. For rental property this is normally appraised in let condition, which is lower than the same property vacant.
3. The formula, component by component
Numerator: outstanding loan. All loan parts together, not just the largest. A second or subordinated loan counts: the lender looks at total debt secured on the property.
Denominator: value. Which value depends on who is asking:
| Value basis | When it is used |
|---|---|
| Purchase price | At acquisition, absent a more recent appraisal |
| Market value in let condition | What lenders normally use for rental property |
| Market value with vacant possession | Owner-occupation, or sale after tenant departure |
Those three can differ substantially on the same property. Always ask which value an LTV is based on before comparing two offers.
4. Worked example
The same apartment as on the other pages: bought for € 285,000, with € 44,740 of transfer tax and acquisition costs, financed with € 199,500.
| Item | Amount |
|---|---|
| Purchase price (= value at acquisition) | € 285,000 |
| Loan amount | € 199,500 |
| Acquisition costs (not financed) | € 44,740 |
| Total investment | € 329,740 |
| Own equity | € 130,240 |
LTV = (199,500 ÷ 285,000) × 100% = 70.0%
| Metric | Value | What it means |
|---|---|---|
| LTV | 70.0% | Seventy percent of value is borrowed |
| Equity as a share of investment | 39.5% | What you actually put in |
| Difference | 9.5 points | The acquisition costs the lender does not finance |
Anyone hearing "70% LTV" and assuming they contribute 30% will be € 44,740 short on this property. That is not a detail when planning your equity.
5. How LTV changes over time
LTV is not fixed. It falls with amortisation and with rising value, and rises when value falls. The same property after five years on a 5% annuity loan:
| Scenario | Outstanding | Value | LTV |
|---|---|---|---|
| At purchase | € 199,500 | € 285,000 | 70.0% |
| After 5 years, value flat | € 183,200 | € 285,000 | 64.3% |
| After 5 years, value +2% a year | € 183,200 | € 314,663 | 58.2% |
| After 5 years, interest-only, value flat | € 199,500 | € 285,000 | 70.0% |
That last row is the argument against interest-only that is rarely made explicitly: your LTV then moves only with the market, never with your own effort.
6. LTV at exit
If you intend to sell after a fixed holding period, the LTV at purchase is not the figure that decides anything. What matters is your position on the way out: the debt outstanding at the end of your exit year, over the value at that same moment.
LTV at exit = debt outstanding at end of exit year ÷ value at end of exit year × 100%
Both sides of the fraction sit at the same date. That sounds obvious, and it is still the most common error in an exit model: a freshly amortised balance set against a valuation from the year you bought, or the reverse.
Two forces pull the ratio down over a holding period, and they are worth separating because only one of them is yours. Amortisation shrinks the numerator, and you paid for every euro of it. Capital growth inflates the denominator, and the market can just as easily take it back. They do not simply add up either: because a smaller debt and a larger value act on the same fraction, their combined effect is less than the sum of the two measured on their own. The honest way to read an exit plan is to set the growth assumption to zero and look at what is left. Whatever remains is the part you bought with your own repayments.
On a development scheme this is exit loan-to-GDV. The denominator is no longer the value in let condition but the gross development value: total sales proceeds, or the appraised value on completion. And there is a trap in the numerator. Where interest during construction is not serviced monthly but rolled up onto the facility, the debt grows throughout the project. Exit debt is then the principal, less anything repaid, plus that accrued interest. Model it on the original principal alone and your exit gearing looks better than it is, and on a long programme or one that slips, the gap is not a rounding difference.
7. What counts as a good LTV?
As a guide for Dutch rental-property lending in 2026, not a published standard:
| Range | What it usually signals |
|---|---|
| below 60% | Low risk premium, comfortable financing margin |
| 60% – 70% | Standard for this market |
| 70% – 80% | Higher rate premium; not every lender will go here |
| above 80% | Rarely available for investment property |
A low LTV reduces your rate and your risk, but also your return on equity: you commit more of your own money for the same rental income. LTV is a trade-off between risk and leverage, not a number to minimise.
8. Four mistakes that distort the number
Using vacant-possession value on a let property. That makes LTV look lower than the lender calculates, and can derail a financing application unexpectedly.
Counting only the main loan. A second loan part belongs in the numerator. The lender looks at total debt on the security.
Confusing LTV with leverage. Leverage is measured against total investment, not value. In the example above LTV is 70% while equity is 39.5% of the investment: those two do not add up to 100.
Reading capital growth as amortisation. A multi-year table shows LTV falling neatly, and that reads as progress. But ten years of assumed growth is not an achievement of yours, and it may not arrive. Set growth to zero and see what survives; that part you bought with your own repayments.
9. Frequently asked questions
Will a lender finance the transfer tax?
Usually not for investment property. LTV is calculated on value, and acquisition costs fall outside it. Expect your own contribution to be higher than "100% minus the LTV" suggests.
What is the difference between LTV and LTC?
LTV compares the loan to value; LTC (loan-to-cost) compares it to the total project cost. On a conversion or renovation these diverge sharply: cost is what you put in, value is what it is worth afterwards.
Does my LTV change when the market rises?
Yes, it falls. With a flat loan and rising value the ratio improves. That can justify asking for a lower risk premium at a rate review: though most lenders will want a fresh appraisal first.
Why is the lender's value lower than I expected?
Rental property is appraised in let condition. A sitting tenant limits what a buyer can do, which depresses value relative to the same property without a tenant. How much varies by property, tenancy and market segment; ask the appraiser for the reasoning rather than applying a rule of thumb.
Does a renovation count towards value?
Only once carried out and appraised. Some lenders will finance against post-works value, but with a construction escrow and staged inspections. Base your application on current value unless you have that commitment in writing.