Loan-to-value ratio
lastmod 2025-06-29created 2025-06-292 edits
The loan-to-value ratio (Loan-To-Value ratio, or LTV) is a financial term for the ratio of the loan a lender such as a bank will grant relative to the price of the asset pledged as collateral when lending money. To cover repayment of a loan claim by disposing of the collateral if the loan defaults, and to avoid any shortfall in repaying the loan claim, financial institutions extend secured loans within a set loan-to-value ratio. It is also commonly called the mortgage loan ratio. From the borrower's point of view, it can be thought of as the ratio of the maximum amount that can be borrowed relative to the price of the collateral, such as a house. For example, if a borrower can borrow up to 100 million won against a house with a market value of 200 million won, the LTV is 50%.
Currently, no matter how high the collateral value is, apartments worth 1.5 billion won or more are classified as ultra-high-priced apartments, and mortgage loans on them are restricted altogether.
In brief
In a word, the ratio of the loanable amount to the collateral property
When taking out a loan, a high % value means you can borrow a lot.
So when regulations get stricter, the % value goes down (that is, banks lend less)
See also
- Korean: 대출
- Korean: 모기지
- Korean: 담보 인정 비율 (LTV; Loan to Value)
- Korean: 총부채 상환 비율 (DTI; Debt to Income)
- Korean: 총부채 원리금상환비율 (DSR; Debt Savings Ratio)
- Korean: 주택청약