Glossary for Investors

Loan-to-Value Ratio (LTV)

The Loan-to-Value Ratio is commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

LTV = First Lien Loan ÷ Property Value

For more on leverage and LTV, please refer to this article

 

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