Loan to Value Ratio
Shown as a percentage, this is the relationship between the
mortgage loan and the
appraised value of the property.
A lending risk assessment ratio that financial
institutions and others lenders examine before approving a mortgage.
Example:
Jim needs to borrow $92,500 to purchase a $100,000 property. The LTV ratio yields
a value of about 92.5%. Since bankers usually require a ratio at a maximum
of 75% for a mortgage to be approved, it may prove difficult for Jim to get
a mortgage.
