LTV (Loan to Value Ratio)

The Loan to Value Ratio is one of the most important figures lenders use when assessing a borrower’s risk. A higher LTV means the borrower is contributing a smaller deposit, which increases the lender’s exposure and may result in stricter lending conditions. In Australia, borrowers with an LTV above 80 per cent may need to pay Lenders Mortgage Insurance which adds to their overall costs. This directly influences how competitive a buyer can be when making offers. Sellers should understand that buyers with high LTVs may face more hurdles during the finance approval process. For this reason, an experienced agent will assess buyer qualification carefully and maintain close communication with brokers and lenders. Understanding LTV dynamics helps the agent anticipate delays, prevent contract failures and prioritise the strongest buyers.

Practical Example

A buyer shows strong interest in your property and submits an offer quickly. During discussions, your agent learns that the buyer is relying on a 90 per cent LTV loan which means they will need Lenders Mortgage Insurance and face strict bank scrutiny. The lender requests additional income verification, which delays their finance approval. Your agent stays in contact with the buyer’s broker, ensuring timely updates and pushing the process forward. Meanwhile, your agent keeps you informed and continues engaging with other prospective buyers as a backup. The buyer eventually receives unconditional approval and proceeds to settlement, demonstrating how skilled agent management reduces the risks associated with high LTV buyers.

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