Loan to Value (LTV) ratio

Subject: Economy

Context: Home loan rates are at 15-year low.

Concept:

The home loan rates are linked to the borrower’ credit score and Loan to Value ratio.

About LTV ratio

An LTV ratio is calculated by dividing the amount borrowed by the appraised value of the property, expressed as a percentage.
LTV ratio= Mortgage Amount/ Appraised Property Value.
For ex- For a Rs 100,000 appraised value, and making a 10,000 down payment, if we borrow 90,000. This results in an LTV ratio of 90%.
It help lender determine the level of exposure to risk they take on when underwriting a mortgage.