Loan-to-value ratio

The loan-to-value ratio in the context of a mortgage is the value of a property that serves as the basis for granting a loan. It takes into account various factors such as the condition of the property, the location, the current market value and other aspects. The loan-to-value is match-decisive in determining the maximum amount a bank is willing to grant as a mortgage loan. The mortgage granted is equal to the loan-to-value multiplied by a certain percentage. If the purchase price exceeds the loan-to-value ratio, the difference must be financed from additional equity.