Is a mortgage information ratio introduced in Spain in 2008. This ratio measures the percentage of debt over the value of the property according to the latest appraisal. In short, the LTV provides the investor with a tool in the form of a ratio to assess the magnitude that represents the indebtedness of an asset in relation to its real and current value. It is important to consider that, in order to obtain a more accurate LTV ratio, it is key to have had an appraisal of the property as recent as possible.
For example: A loan amounting to €200,000, which is secured by a property recently appraised at €220,000, will have an LTV of 90.90%.
Analysis carried out by different experts have established (in Spain) that a ratio above 80% entails a high risk of default.