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Real Estate vocabulary · Mortgages & Financing

Loan-to-value ratio

Meaning in real estate, with examples

nounCommon term

In real estate, loan-to-value ratio means: The size of a mortgage compared with the value of the property, shown as a percentage. A 200,000 loan on a 250,000 home is an 80% ratio.

In Turkish: kredi/değer oranı, kredilendirme oranı

How it is used

Usually shortened to LTV. Lenders use it to judge risk: a lower LTV, meaning a bigger down payment, often brings a better interest rate. Brokers talk about 90% LTV mortgages and the maximum LTV a bank allows.

Example sentences

  1. With a 10% deposit, you'd need a loan-to-value ratio of 90%.

  2. Rates are lower for loans with a loan-to-value ratio under 60%.

Common collocations

  • high loan-to-value ratio
  • maximum LTV
  • 90% LTV mortgage
  • calculate the loan-to-value ratio
  • mortgageA long-term loan used to buy a property, in which the property itself serves as security for the lender until the loan is paid back.
  • down paymentThe part of the purchase price a buyer pays with their own money at the start, while the rest is usually covered by a mortgage.
  • lenderA bank or other financial company that lends money, especially one that provides mortgages to home buyers.
  • equityThe part of a property's value that the owner truly owns: its current market value minus whatever is still owed on the mortgage.
  • appraisalA professional estimate of how much a property is worth, made by a qualified appraiser, often because a bank needs it before lending.

More terms: Mortgages & Financing

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