Loan-to-value Ratio

Loan-to-value ratio is an estimation of the amount of money one needs to borrow and the monetary worth of a property which they want to buy using the loan.

A loan to value ratio calculation is made using the loan amount and the value assessment of a property. 

Formula:

Loan to Value Ratio = Loan Amount/Assessed Value of Property

Businesses that score a loan to value ratio of 80% or more might not receive access to mortgages since this percentage value is considered to be risky. The one way they could compensate for this, and go on to receive mortgages is by buying a Lenders Mortgage Insurance. 

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