The Loan-to-Gross Development Value (LTGDV) is a financing ratio that indicates the relationship between the loan and the expected final value of a real estate project after completion or renovation. It is calculated by dividing the loan amount by the total market value of the property once the project is completed, including any improvements.
LTGDV is often used in real estate development projects, such as new construction or renovation, where the final value of the property is important for assessing the financing. The lower the LTGDV, the lower the risk for the financier, because the loan is then a smaller percentage of the expected final value of the property.
Formula : LTGDV = (Loan / Expected Market Value upon Completion) × 100