High-Ratio Mortgage Definition: The lender or financial institution may approve a high-ratio loan when a borrower cannot pay a sizeable down payment. A high-ratio loan involves a loan that is high in value compared to the property or asset included as collateral.
When the comparative value is close to 100%, there is a better chance for approval, especially if the borrower doesn’t have enough money for a large down payment or there is a lower income. A highly valued asset can improve a borrower’s chances with a lender, and usually requires that the loan value exceeds at least 80% of the property or asset’s value.
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