Personal Finance Term
LTV / MOF
Margin of Finance / Loan-to-Value
The percentage of a property's value that a bank will lend you. A 90% margin of finance means you borrow 90% and must pay the remaining 10% as a down payment.
Margin of finance (the lender's term) and loan-to-value ratio (the risk term) describe the same thing from opposite ends. In Malaysia, first and second home loans commonly go up to a 90% margin, but BNM applies a lower cap on the third outstanding housing loan to cool speculation — meaning a larger cash down payment is required for additional properties. The bank lends against the lower of the purchase price or its own valuation, so if the valuation comes in under the sale price, you must top up the difference in cash.
A lower LTV (bigger down payment) means smaller monthly repayments and less interest over the loan's life, while a higher LTV preserves your cash but increases the loan and may require mortgage cover such as MRTA. Remember that the down payment is only part of your upfront cash — stamp duty, legal fees, and valuation costs are on top, and these generally cannot be financed into the loan.