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Combined Effective Loan-To-Value Ratio

Financial Term


Combined Effective Loan-To-Value ratio (CELT) is a financial term that refers to the ratio of all the outstanding loans secured by a property divided by the market value of that property. It is a measure commonly used by lenders to assess the level of risk associated with a particular property or set of properties.

The CELT ratio takes into account all the outstanding loans on a property, including first and second mortgages, home equity lines of credit, and any other types of loans secured by the property. It then divides this total amount of outstanding loans by the appraised market value of the property, resulting in a ratio that represents the level of debt relative to the value of the home.

The CELT ratio is used in the financial industry to help lenders assess the risk associated with lending money against a particular property. A high CELT ratio indicates a higher level of debt relative to the value of the property, which in turn indicates a higher level of risk. Lenders use this information to determine the amount of credit they are willing to extend to a borrower, as well as the interest rate and other terms of the loan.

In addition to helping lenders assess the risk associated with a particular property, the CELT ratio can also be used by borrowers to understand their level of indebtedness and make informed decisions about managing their debt. By understanding their CELT ratio, borrowers can make informed decisions about whether to refinance their current loans, pay down outstanding debt, or take on new debt for other purposes.


   
     

Combined Effective Loan-To-Value Ratio

Financial Term


Combined Effective Loan-To-Value ratio (CELT) is a financial term that refers to the ratio of all the outstanding loans secured by a property divided by the market value of that property. It is a measure commonly used by lenders to assess the level of risk associated with a particular property or set of properties.

The CELT ratio takes into account all the outstanding loans on a property, including first and second mortgages, home equity lines of credit, and any other types of loans secured by the property. It then divides this total amount of outstanding loans by the appraised market value of the property, resulting in a ratio that represents the level of debt relative to the value of the home.

The CELT ratio is used in the financial industry to help lenders assess the risk associated with lending money against a particular property. A high CELT ratio indicates a higher level of debt relative to the value of the property, which in turn indicates a higher level of risk. Lenders use this information to determine the amount of credit they are willing to extend to a borrower, as well as the interest rate and other terms of the loan.

In addition to helping lenders assess the risk associated with a particular property, the CELT ratio can also be used by borrowers to understand their level of indebtedness and make informed decisions about managing their debt. By understanding their CELT ratio, borrowers can make informed decisions about whether to refinance their current loans, pay down outstanding debt, or take on new debt for other purposes.


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