Loan to Value Ratio (LTV)

The Loan-to-Value Ratio is the amount of a secured loan or mortgage divided by the fair market value of the property. For example, if your property is worth $100,000 and you have a mortgage balance of $50,000, the Loan-to-Value ratio on your home would be 50%.  The LVR helps you quickly determine how leveraged your property is based on the fair market value of the property versus your cost.  You can also use the LVR to determine the amount of your equity. 

If you have more than one loan secured against your property, you need to add up the outstanding value of each loan in order to calculate the Loan-to-Value ratio. For example, if your home is worth $100,000 and you have a mortgage balance of $50,000, the Loan-to-Value ratio on your home would be 50%. However, if you also have a second secured loan on your home for $25,000, the Loan-to-Value ratio on your home would be 75% ((50,000+25,000) divided by 100,000).