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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.
Bernhard
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?