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Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


See loan-to-value ratio.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.

Loan-to-Value Ratio (LTV)

The loan amount divided by the lesser of the selling price or the appraised value.

The LTV and down payment are different ways of expressing the same facts. See Down Payment/Down Payment and LTV.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Industry analysts generally agree this is a good idea, although some say a higher LTV, which essentially lowers the down payment to buy property, should not be the norm.
He said 231 LTV and 286 HTV vehicles had been handed over to Islamabad Metropolitan Corporation.
"The MENA LTV Fund continues to make compelling private investments, calling on the unique mix of local-market expertise and global experience of our team of asset management professionals.
We believe LTV at origination is a key driver of a borrower's willingness to repay mortgages and is positively correlated with foreclosure frequency.
"Though the company itself has basically gone bankrupt, LTV's business model has absolutely not failed," one insider told the Sunday Mail.
The above LTV's apply to properties that are completed.
On average, multifamily loans have a higher LTV ratio than other commercial properties, and recent multifamily loans have been issued at LTV ratios that exceed those of maturing loans originated between 2004 and 2007.
Ray Boulger, senior technical manager at mortgage broker John Charcol, said: "We are certainly seeing more competition on rates at the high LTV end of the mortgage market.
With lower rates on more than 30 mortgage products, Santander is increasing its 60% LTV band to 70% for most direct products and is realigning rates for new business, homebuyer and remortgage deals.
TO help first-time buyers, Yorkshire Building Society has cut fixed rates on its 90% loan-to-value (LTV) mortgages by up to 0.25%, with two-year fixes from 4.49%.
Note that the sought value here is a measure of velocity, LTV. Short for lactate threshold velocity, this is the indicator of how fast you can run at (or just below) the threshold at which you begin to dramatically increase your blood lactate levels.