Loan-to-Value Ratio(LTV)

The loan-to-value (LTV) ratio is commonly used by banks and building societies for assessing the percentage of the value of the property a mortgage covers. Therefore, lenders use this metric to determine the amount of risk they are undertaking while approving a loan. 

Normally, the loans with higher LTV ratios are high-risk loans. 

Therefore, if the mortgage is accepted, the loan charges higher interest rates for the borrower..

If the loan-to-value ratio is equal to or below 80% then the investors offer mortgage and home-equity applicants at the lowest possible interest rate.

The Loan-to-value ratio is evaluated by: –

  LTV = MA / APV


MA=Mortgage Amount

APV=Appraised Property Value​

This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

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