What is LTV?
LTV – or Loan to Value – is a term used by lending companies to assess the size of the loan you are requesting against the value of the property against which it will be secured. It is therefore a term used only when discussing secured loans. It’s easiest to understand in the context of mortgages – a £90,000 mortgage on a home worth £100,000 would have an LTV of 90%. In the case of loans you need to take into account the total borrowing against the property. ie the new loan and any existing mortgage. Say we have a home worth £100,000 again. The existing mortgage still has an outstanding debt of £90,000 and we request a new loan of £20,000. With the new loan, the total borrowing against the home would be £110,000 or 110% LTV.
