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.
References in periodicals archive ?
Interactive map showing average loan to value ratios across the country
The scheme, which is in alliance with a number of UK house builders, allows more borrowers to secure funding of up to 95% loan to value on new-build properties.
Risk-averse lenders are being drawn back to the buy-to-let sector and away from the high loan to values required by most first-time buyers.
HSBC Bank Middle East has now increased its loan to value ratio on mortgages, and will offer 75 percent financing on completed villas, 70 percent on completed apartments and 50 percent on off-plan units, reports Arabian Business .
In some ways their loan book is similar to Northern Rock's as they did a great deal of high loan to value lending on their But the current strategy at Mortgage Express seems to be they want to reduce their mortgage book and have started to actively encourage people to remortgage away from them.
The average rate for 75% loan-to-value buy to let products has increased by 0.35% to 7.33% in the past year, and by 0.63% to 7.46 per cent for 85% loan to value products.
The Post Office has made a further cut to its three-year fixed rate mortgage, taking it down to 5.34%, up to 95% LTV (loan to value) with a pounds 399 arrangement fee and a lending fee of pounds 195 payable at either the beginning or the end of the term.
The important ratios, "loan to value" and "loan to cost" have taken on a new pragmatic definition.
Loan to Value he percentage of value a lender can loan Amortization The period of time the loan is being paid
Fixed rates on residential investment bridging loans begin at 0.64% with a maximum loan size of GBP3m and facilities at up to 75% loan to value, commercial bridging loans are available from 1.09% with lending up to GBP5m and a maximum loan to value of 65%.
Earlier this month, the Bank requested a range of powers including the ability to set a debt to income ratio for mortgages and control loan to value ratios.
The loan was sized at 75% loan to value with a fixed rate of 3.75% for ten years.