The Loan To Value (LTV) of a stock represents the percentage of its value you can borrow against.
If you own $10,000 worth of ABC stock, which has an LTV of 75%, you will be able to borrow a maximum of $7,500 against it.
If you own $10,000 worth of ABC stock, which has an LTV of 50%, you will be able to borrow a maximum of $5,000 against it.
If you own $10,000 worth of ABC stock, which has an LTV of 0%, you will not be able to borrow against it.
The blended LTV represents the weighted average LTV of all your stocks in your whole portfolio.
In the example below, the blended LTV is 58%.
|Symbol||Stock Value||LTV||Max Borrow|
|ABC||$ 15,000.00||75%||$ 11,250.00|
|DEF||$ 10,000.00||50%||$ 5,000.00|
|XYZ||$ 5,000.00||25%||$ 1,250.00|
|Total||$ 30,000.00||58%||$ 17,500.00|
Concentration LTVs have not been applied in this example. For more information on concentration requirements, please click here.
LTV and Maintenance Requirements
We prefer to show you how much you can borrow against as opposed to how much you cannot, which is why we use LTV instead of maintenance requirements.
Maintenance Requirements is an industry term used to describe the minimum amount of equity that must remain in an account. It is commonly presented as a percentage, for example stock ABC has a maintenance requirement of 25%, which means 25% of the value of your ABC must remain as equity and cannot be borrowed against.
We use LTV to represent the percentage of value you can borrow while maintenance requirement represents the percentage of value you cannot borrow. Therefore, 100% - LTV = Maintenance Requirement %.
If you own $10,000 worth of ABC stock, which has an LTV of 75% and a Maintenance Requirement of 25%, you will be able to borrow a maximum of $7,500 against it and must maintain $2,500 as equity in your account.
The relationship between LTV and maintenance requirement is the same for blended LTV and blended maintenance requirement.