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Loan to Value Ratio |
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Loan to Value Ratio 1. In mortgages, the ratio of the amount of a potential mortgage to the value of the property it is intended to finance, expressed as a percentage. It is used as a way to assess the risk of making a particular mortgage loan. A lower loan-to-value ratio is seen as a lower risk to the lender. Most mortgage lenders require a maximum loan-to-value ratio of 75%. That is, a borrower is usually expected to pay for 25% of the value of a property out-of-pocket. 2. More broadly, a ratio of the amount of a potential loan to the asset it is intended to finance. In addition to gauging the risk involved in making the loan, it tells the borrower whether or not the loan can be repaid if he/she sells the asset. This can be important if the borrower becomes unable make payments. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| While short-term bridge lenders are also selective about the quality of their deals, on income-producing properties BRT will, for example, offer bridge financing to 85% loan to value secured by first and second mortgage loans and participation loans to 90% loan to value and joint venture opportunities. The weighted average current loan to value ratio (CLTV) of the mortgage loans is 63. This non-recourse loan was based on an aggressive 10-year attractive fixed rate and a conservative loan to value. |
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