LTV or loan-to-value is one of the most important ratio and term used in the business of loans. LTV ratio is the ratio of the amount of loan that can be given to the total value of the property you are trying to take a loan against.

LTV can range from 75% to even 90% of the property value and also depends on the borrower’s relationship with the lender and the scheme that the borrower is availing.

A higher LTV means that the lender is lending a greater loan amount and therefore, there’s relatively lesser down payment that the borrower needs to arrange out of his/her own pocket. In contrast, a lower LTV means that a borrower will have to arrange for a larger sum to be paid as down payment.

It must be noted, however, that a higher LTV also means a higher EMI for the borrower.