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LTV (Loan to Value)
LTV, or loan-to-value ratio, indicates what percentage of a property's value the bank finances with the mortgage.
Detailed explanation
Loan to Value is calculated by dividing the loan amount by the property's appraisal value. An 80% LTV means the bank finances 80% and the buyer contributes the remaining 20%. The lower the LTV, the less risk the lender takes on and the better the terms it usually offers.
Practical example
For a property appraised at €150,000 with a mortgage of €105,000, the LTV is 70%.
When it matters
LTV is key when seeking financing: it determines how much of your own capital you need to contribute and the terms of the loan.
At Arkos Investor
At Arkos Finance we help structure the financing of your deals, optimising the LTV for each asset.
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