Understanding LTV (loan-to-value)

When applying for a FOLK2FOLK loan, you may hear us talk about your Loan-to-Value ratio or LTV. It’s a key part of how we assess your loan.

What is LTV?

LTV stands for Loan-to-Value. It’s the ratio between the loan amount you’re applying for and the current market value of the land or property you’re offering as security.

Example: If your property is valued at £500,000 and you apply to borrow £250,000, your LTV would be 50%.

What’s the maximum LTV at FOLK2FOLK?

We typically lend up to 60% LTV. This means the loan amount does not usually exceed 60% of the property’s independently assessed value.

In some instances, we may consider a higher LTV but that depends upon the circumstances of the loan. If you’re unsure you can always talk to us.

Why does LTV matter?

LTV is an important part of how we assess loan applications. It helps determine the maximum amount that can be borrowed against the value of the security property.

By keeping LTV within a sensible limit, we help protect both you and our investors – ensuring the loan is responsibly structured and that the security property provides sufficient cover in the unlikely event of repayment issues.

A lower LTV generally means a stronger security position, and may allow greater flexibility in terms or speed of approval, while a higher LTV increases the level of risk and may limit how much you can borrow.

How is the property value assessed?

We’ll arrange a professional valuation of the proposed security using a valuer from our panel. We don’t accept borrower-provided estimates, estate agent opinions, or outdated valuations.

Valuation fees will be payable by the borrower during the legal process.
Learn more: Borrowing Costs Explained

What if I have multiple properties?

We may accept multiple assets as security for example, land plus a holiday let as long as the combined value meets our requirements and the properties are acceptable under our security criteria.

In some cases, we can consider third-party-owned security, provided the correct legal arrangements are in place.