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"Value" in the eyes of the bank, like, what they can make back off it if they repossess and sell when someone fails to payback the massively overinflated panic buy they made before the rates went up. :)
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When we bought our up in Scotland, the LTV was based on the valuation or what you paid, depending on what is lower, so if we paid £305,000 for a house valued at £300,000 then the mortgage LTV would be based on £300,000. However if we paid £280,000 for a house valued at £300,000 the LTV would be based on £280,000.
EDIT: Theoretically, if the LTV was based on what you paid you could influence your LTV artificially which the banks would probably not want you to do, although this is probably a false economy so please ignore this comment.
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It's usually the lesser of your purchase price and the valuation, unless there's some compelling reason you can prove to the bank why you were able to buy it below market value.
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hippy
Bernhard
NickCJ
@DethBeard
Stupid question warning
When buying a new house is the mortgage LTV based on what you pay or what the place is worth?
E.G. the house is on for 300, but you get it for 280, you get a mortgage for 250, is it a 90% or 85% mortgage?