What is LTV? April 9
LTV stands for Loan To Value. LTV is nothing but a ratio of the loan to the actual value. In other words it is the ratio of the amount you borrow to the actual value of the property. So for example if you bought a home worth $200,000 and put $50,000 down and had the rest $150,000 as a loan/mortgage then the LTV is 150,000/200,000 = 0.75 or 75%. A 100% financing or no money down loan is a 100% LTV.
The higher the LTV the more riskier the loan is since you are putting lesser money down and borrowing more money. Therefore lenders also usually use the LTV to figure out the interest rate. If the LTV is more than 80% then also might be required to buy a mortgage insurance. On the other hand if you have a low credit score then a lower LTV might increase your chances of securing a loan and even a good interest rate.
LTV is ratio of one loan with respect to the property value. But with HELOCs or Home Equity Line of Credit it is possible to have multiple loans on a property so there is a CLTV or Combined Loan to Value. CLTV combines all the loan values and finds the ratio with respect to the actual value of the property. So for a home worth $200,000 with a $150,000 loan/mortgage and $25,000 HELOC (Home Equity Line of Credit) the CLTV is ($150,000+$25,000)/$200,000 = .875 or 87.5%.