Definition – What is Loan to Value (LTV)?
LTV is a measurement of the loan amount to the value of the borrowed asset.
Formula – How to calculate LTV
LTV = (Borrowing Amount / Asset Value) x 100%
A loan has borrowing amount of $1,250 on an asset value of $5,700.
LTV = ($1,250 / $5,700) x 100% = 0.2193 x 100% = 21.93%
Therefore, the LTV is 21.93%.