Valuation and LTV criteria
The Financial Business Act and the Mortgage Act contain provisions on property valuation.
Where loans are funded by the issuance of SDOs and SDROs, valuations are based on the open market value of a property. Where loans are funded by ROs, valuations are based on the mortgageable value. In Denmark, the mortgageable value will correspond to the open market value in the vast majority of cases, cf sections 10-15 of the Mortgage Act.
LTV limits - an overview
|
Loan type ------------------------- Property category |
Covered bond - SDO |
Covered mortgage bond - SDO |
Mortgage Bond - RO |
| Residential property | 80% or 70% (1) |
80% or 70% (1) |
80% |
| Holiday property | 60% | 60% | 60% |
| Agricultural property | 60% (2) | 60% (2) | 70% |
| Commercial property | 60% (2) | 60% (2) | 60% |
Note:
1) 80% for loans issued with up to 30 years maturity and 10 years interest-only period and 70% for loans with an unlimited maturity and interest-only period. From July 2009 the limit rises to 75%.
2) The LTV can be raised to 70% if the bank adds additional collateral.
