Loan-to-value (LTV) is a term used in mortgage lending that describes the ratio of the amount of the loan to the value of the property being purchased or refinanced. In simpler terms, it tells you how much money you are borrowing compared to how much the property is worth.
For example, if you are buying a home that is worth $200,000 and you need a $150,000 mortgage to purchase it, then your loan-to-value ratio would be 75% ($150,000 ÷ $200,000).
The higher the loan-to-value ratio, the more you are borrowing relative to the value of the property. Generally, lenders prefer lower LTV ratios because it means that the borrower has more equity in the property and is less likely to default on the loan.
So, the loan-to-value ratio is an important factor that lenders consider when evaluating a mortgage application and determining the terms of the loan.