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Loan to value ratio

This glossary or A to Z should help clear up any confusion as to what terms mean what in the mortgage and insurance industry

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Letter L

Loan to value ratio

This is the ratio of the loan amount to the property valuation expressed as a percentage. E.g. if a borrower taking out 40,000 on a property worth 100,000 then the loan to value would be 40% if they were borrowing 60,00 on the same property then the \loan to value would be 60%.

Most lenders are happy to lend 75% loan to value, over that amount lenders tighten up their criteria as they feel they are taking a bigger risk should they have to reposess the property in the future there is more of a risk of losing money on the loan secured on it.

FSA declaration and important text about mortgage advice