The loan-to-value (LTV) ratio shows what proportion of a property's value is represented by the outstanding loan. Expressed as a percentage, it is calculated by comparing the loan balance with the value assigned to the property. Lenders use the ratio when setting borrowing conditions and assessing the equity available as protection against a fall in the property's value.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.