The loan-to-value (LTV) ratio is the percentage of a property's appraised value that a lender is willing to finance, calculated by dividing the loan amount by the property value.
A lower LTV ratio means you are putting more money down and borrowing less, which typically results in better interest rates and terms. Most conventional mortgages require an LTV of 80% or less, meaning a 20% down payment. For second homes and investment properties, lenders often require lower LTV ratios because they consider these loans higher risk, which means larger down payments.
GoForth, a luxury co-ownership company, helps make financing more attainable by structuring ownership as 1/4 interests, which significantly reduces the total dollar amount each family needs to finance. Even if a lender requires a lower LTV ratio for a fractional interest, the smaller purchase price means the actual cash needed for a down payment is far less than buying a comparable luxury home outright. GoForth's team can connect buyers with lenders experienced in fractional ownership financing.