What is LTV and why it matters for loan security?

LTV in property-backed lending

LTV (loan-to-value) is the loan amount divided by the value of the mortgaged property, expressed as a percentage. If a property is worth PLN 2 million and the loan is PLN 700,000, LTV is 35%. At Hazel we typically work with levels around 35%, 50% and 60% LTV - each reflects a different risk/return profile for investors.

Why investors look at LTV first

Private investors in secured loans are not buying generic credit risk - they finance a named transaction with a registered mortgage. Lower LTV means market value clearly exceeds the debt. That cushion absorbs price volatility, enforcement costs and time to sell the asset. Together with interest, fees and legal safeguards, LTV is the primary safety metric we discuss with investors.

• 35% LTV - conservative level with a larger value buffer,
• 50% LTV - moderate level with meaningful collateral headroom,
• 60% LTV - higher level, higher estimated return, smaller value buffer.

LTV for business borrowers

For companies, a property-backed loan is often a faster route than a lengthy bank process. Higher LTV releases more capital against the same asset but requires stronger project and legal due diligence. Hazel can give a preliminary answer in as little as 2 hours; final terms depend on valuation, title and documents.

LTV and estimated investor return

Annual interest in our model is 10%; arrangement fees differ by LTV tier. Total estimated return usually ranges from about 13% to 17% p.a. - higher LTV, higher fee and higher estimated return. Figures are illustrative, not a profit guarantee.

Want numbers on your own scenario? Use the calculator on the home page or contact us to discuss an LTV level that fits your case.