Overpaying Before You Remortgage: How It Changes Your Loan-to-Value
This guide is for general information only and does not provide financial advice. Check your lender’s terms before overpaying, as early repayment charges may apply. Your home may be repossessed if you do not keep up repayments on your mortgage.
Loan-to-value (LTV) is your mortgage balance as a percentage of your property’s value. Lenders may take it into account when they decide what to offer, so a lower balance can change your LTV. Whether it changes what is offered to you depends on the lender, and this page can only show the arithmetic.
A worked example
Take a property value of £250,000, which is an example, and a balance of £200,000. The table shows the balance and LTV after one-off overpayments, ignoring interest in between and any change in the property’s value. It assumes each overpayment is allowed under your mortgage terms with no charge.
| One-off overpayment | Balance | Loan-to-value |
|---|---|---|
| None | £200,000 | 80.0% |
| £5,000 | £195,000 | 78.0% |
| £10,000 | £190,000 | 76.0% |
| £20,000 | £180,000 | 72.0% |
Whether a lender’s rates or eligibility vary with loan-to-value, and where any bands fall, depends on the lender. This site does not say.
Questions worth asking
- What is your property worth now? Your LTV depends on a valuation, which can differ from your estimate.
- Would the overpayment exceed your yearly allowance on your current deal? See the UK mortgage overpayment cap.
- Would you still keep enough cash for emergencies? See overpaying or keeping an emergency fund.
Figures are estimates from this site’s calculator, using the assumptions stated above each table. The rates, fees and property values shown are examples, not figures that are available to you. They are illustrations, not forecasts. Try your own figures in the free mortgage overpayment calculator.
If you are thinking about remortgaging or overpaying, consider speaking to a regulated mortgage adviser. This page is general information, not advice on your circumstances.
Questions people ask
Does overpaying reduce my LTV?
Overpaying reduces your balance, which lowers your LTV if your property value stays the same. The table shows the arithmetic for one example.
Will a lower LTV get me a better rate?
It may affect what a lender offers, but it depends on the lender and the product. This site cannot say what you would be offered.
Should I overpay before I remortgage?
It depends on your circumstances, your allowance and any charges. See what happens to overpayments when you remortgage. You may want to speak to a regulated mortgage adviser.
Other ways to look at it
remortgaging or overpaying, what a lower mortgage rate could save, remortgage fees and the break-even point, a shorter term or overpaying, what your payment could be when your deal ends. For how overpayments and remortgaging interact more generally, see what happens to overpayments when you remortgage and how overpayments affect your remortgage rate.