Loan to Value Ratio
This tutorial shows how to calculate the Loan to Value Ratio (LVR) in Excel
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=B5/C5
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GENERIC FORMULA
=Loan Amount/Appraised Property Value
ARGUMENTS EXPLANATION The Loan to Value Ratio (LVR) is an assessment of risk that a lender examines before approving a loan. It allows the lender to assess if the party that takes out the loan defaults on it, they can still repay the loan if the property that the loan is secured against is sold. Therefore, the higher the ratio the greater the risk.
In this example the total loan amount is $540,000 and appraised property value is $700,000, therefore deriving with an LVR of 77%. |
RELATED TOPICS
| Related Topic | Description | Related Topic and Description |
|---|---|---|
| Debt Service Coverage Ratio | How to calculate the Debt Service Coverage Ratio (DSCR) in Excel |