låneværdiboligværdi

Låneværdiboligværdi translates to loan-to-value ratio in English. It is a metric used by lenders to assess the risk associated with a mortgage loan. The ratio is calculated by dividing the loan amount by the appraised value of the property. For example, if a property is appraised at $500,000 and the borrower is seeking a loan of $400,000, the loan-to-value ratio would be 80% ($400,000 / $500,000).

A lower loan-to-value ratio generally indicates a lower risk for the lender. This is because a larger equity stake in the property is held by the borrower. Consequently, borrowers with lower LTV ratios may qualify for more favorable interest rates and loan terms. Conversely, a higher loan-to-value ratio suggests a greater risk for the lender, as the borrower has less equity. This can lead to higher interest rates, additional fees, or even denial of the loan.

In many jurisdictions, lenders have specific LTV thresholds that trigger requirements for private mortgage insurance (PMI). This insurance protects the lender in case the borrower defaults on the loan. Typically, if the LTV is above 80%, PMI is required for conventional loans. The LTV is a crucial factor in mortgage underwriting and plays a significant role in determining the overall cost and accessibility of home financing.