Loan to Value (LTV) ratio

Loan to Value (LTV) ratio is the amount of the loan as it relates to the market value of the property which secures the loan. Banks are usually doing their own appraisals to define the market value of the property. It’s expressed as a percentage. The majority of investors are trying to achieve high LTV to gain leverage on their invested money. Lenders have set requirements for LTV depending on various criteria. The LTV can be limited more for investment properties than for owner occupied ones.

Note: Zilculator published a new LEARN section with an updated article including Loan-to-Value excel template.