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What is LTV & what does it mean for a mortgage?

You’ve probably seen the term LTV when looking into mortgages, or seen it mentioned in articles or online any time house prices, or mortgages are mentioned. But what is it and what does it mean for you? LTV stands for loan-to-value. It’s a percentage that represents the amount you’ve borrowed from a lender to buy a property.

What is loan-to-value ratio (LTV)?

Loan -to-value ratio is the relative difference between the loan amount and the current market value of your home expressed as a percentage. LTV is a common measurement that helps lenders make decisions when issuing loans. LTV also helps lenders assess a borrower’s ability to afford a mortgage.

What is a high-LTV mortgage?

This usually means getting a conventional mortgage with 10%-20% down. There are a number of loan programs specifically geared toward homeowners with high LTV ratios. There are even some programs which ignore loan-to-value altogether. Here is a brief review of the more common high-LTV loan types.

What does CLTV mean on a home equity loan?

CLTV applies to both home equity loans and home equity lines of credit HCLTV (High combined loan-to-value) measures your highest possible loan to value ratio, including any untouched balance on your second mortgage. HCLTV applies only if you have a HELOC Here’s how each one is calculated. Calculating CLTV is relatively simple.

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