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| Loan to Value Ratio |
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The Loan-to-Value Ratio is the amount of a secured loan or mortgage divided by the value of the property used as security expressed as percentage. For example, if your home is worth £100,000 and you have a mortgage balance of £50,000, the Loan-to-Value ratio on your home would be 50%.
If you have more than one loan secured against your property, you need to add up the outstanding value of each loan in order to calculate the Loan-to-Value ratio. For example, if your home is worth £100,000 and you have a mortgage balance of £50,000, the Loan-to-Value ratio on your home would be 50%. But, if you, also, has a second secured loan on your home for £25,000, the Loan-to-Value ratio on your home would be 75% ((50,000+25,000) divided by 100,000).
- Debt is money borrowed, usually with interest.
- Interest is the cost of using the money provided by a loan, credit card, or line of credit, usually expressed as a percentage of the amount you borrow and pegged to a specific period of time. For example, the interest on your mortgage may be 6.00% annually, or you may pay 1.2% interest monthly on the unpaid balance of your credit card purchases. Interest also refers to the income, figured as a percentage of your principal, that you receive for buying a bond, putting money into a bank deposit account, or making other fixed-income investments.
- An Introductory Rate is a low interest rate on a credit card, personal loan or mortgage designed to appeal to consumers shopping for the lowest rates. The lender must tell you how long the introductory rate lasts and what the real cost of borrowing will be at the end of the introductory period. Also, known as a Teaser Rate.
- A Teaser Rate is a low introductory interest rate on a credit card, personal loan or mortgage. The lender must tell you how long the teaser rate lasts and what the real cost of borrowing will be at the end of the introductory period. Also, known as an Introductory Rate.
- Security. When a loan is taken out it is 'secured' on a property, the borrower agrees to the lender creating a charge over the property; the deed makes reference to the rights and obligations of both parties as detailed in the Legal Charge, Standard Security or Loan Agreement. Thus the property is known as the 'security'.
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