What does LTV, GDV, DD, and SPV mean in property finance?
Property finance uses a set of abbreviations that appear in every deal pack, every lender term sheet, and every credit committee paper. If you work with these terms daily, they become invisible. But if any one of them is misunderstood or misapplied in a deal submission, it creates confusion that delays the deal.
This glossary covers the four most common abbreviations — LTV, GDV, DD, and SPV — plus three additional terms that appear frequently in deal documentation: LTGDV, ICR, and DIP. Each definition explains what the term means in practice, how it appears in deal documentation, and why the lender cares about it.
What does LTV mean in property finance?
LTV stands for loan-to-value. It is the ratio of the loan amount to the current market value of the property, expressed as a percentage. A 500,000 loan against a property valued at 1,000,000 is 50% LTV.
In deal documentation, LTV appears in the deal summary, the application form, and the lender’s term sheet. The broker states the requested LTV. The lender confirms it against their own valuation. If the two figures disagree — because the broker’s assumed value differs from the lender’s valuation — the deal terms change.
Lenders care about LTV because it represents their risk exposure. A lower LTV means more borrower equity sits between the lender’s money and a loss. At 50% LTV, the property can lose half its value before the lender’s capital is at risk. At 75% LTV, a 25% decline wipes out the borrower’s equity and starts eroding the lender’s position.
Different lenders have different LTV limits for different deal types. Bridging lenders may go to 75% LTV on residential. Development lenders may cap at 65% of current value. Commercial lenders may work at 60-70% depending on the tenant covenant. The LTV in your deal pack must match the specific lender’s appetite, not a generic market assumption.
What does GDV mean in property development finance?
GDV stands for gross development value. It is the projected market value of a property after development or refurbishment works are completed. If a borrower buys a property for 400,000, spends 200,000 on refurbishment, and the completed property is expected to be worth 800,000, the GDV is 800,000.
GDV appears in development finance deal summaries, feasibility appraisals, and valuation reports. It is the basis for calculating LTGDV (loan-to-gross-development-value), which many development and refurbishment lenders use as their primary risk metric instead of, or alongside, LTV on current value.
Lenders care about GDV because it represents the value that will exist when they need to be repaid. If the exit strategy is sale of the completed asset, the GDV determines whether the sale proceeds will cover the loan. If the exit is refinance, the GDV determines the post-works value against which the refinance LTV is calculated.
The critical point for deal documentation: GDV must be evidenced, not asserted. A figure in the deal summary without comparable sales evidence, a valuer’s assessment, or a residual appraisal is an opinion. Lenders will challenge unsupported GDV figures, and the resulting back-and-forth adds days to the timeline.
What does DD mean in property finance?
DD stands for due diligence. It is the process by which a lender verifies the information in a deal submission before committing to lend. Due diligence covers legal checks (title, searches, planning), financial checks (borrower accounts, proof of funds, credit history), valuation (independent property valuation), and compliance checks (AML, KYC, sanctions screening).
In deal documentation, DD appears in two contexts. First, the lender’s DD requirements — the list of documents and checks they need to complete before approval. Second, the broker’s DD gap list — a schedule showing which DD items have been completed, which are in progress, and which are outstanding.
Lenders care about DD because it protects their capital. A deal that passes DD has been independently verified. A deal that shortcuts DD creates risk that the lender’s compliance team will not accept.
For brokers, understanding the lender’s DD process matters because it determines the timeline. If you know that a particular lender requires an environmental search, a flood risk assessment, and a building survey, you can instruct those in parallel with the application rather than waiting for the lender to request them sequentially. Anticipating DD requirements compresses the timeline. Reacting to them extends it.
What does SPV mean in property finance?
SPV stands for special purpose vehicle. It is a limited company created specifically to hold a property or a group of properties. The SPV is the borrowing entity — the loan is made to the SPV, not to the individual borrower.
In deal documentation, the SPV appears as the applicant on the loan application, the registered owner (or proposed owner) of the property, and the entity against which the lender takes security. The individual behind the SPV — the director and often the personal guarantor — is the sponsor.
Lenders care about SPVs because they create a ring-fenced legal structure. If the deal goes wrong, the lender’s recovery is limited to the assets within the SPV. This is straightforward if the SPV holds one property. It becomes more complex if the SPV holds multiple assets, has intercompany loans, or is part of a group structure.
For deal documentation, the SPV must be properly constituted. Companies House filings must be current. The SPV’s memorandum and articles must permit the borrowing and the granting of security. If the SPV was recently incorporated, the lender will look through to the sponsor’s personal financial position, because the SPV itself has no trading history. The personal guarantee from the director effectively makes the sponsor the substantive borrower, with the SPV serving as the legal vehicle.
What does LTGDV mean and how does it differ from LTV?
LTGDV stands for loan-to-gross-development-value. It is the ratio of the total loan facility to the projected completed value of the property. If a development lender provides a 600,000 facility and the GDV is 1,000,000, the LTGDV is 60%.
LTGDV differs from LTV because it measures leverage against a future value, not the current value. A deal might be 90% LTV on current value (lending almost the full purchase price) but 55% LTGDV if the completed asset is projected to be worth significantly more.
Development and refurbishment lenders use LTGDV as their primary metric because the current value of an unimproved or partially developed asset does not reflect the value that will exist at exit. The deal documentation should state both metrics clearly — LTV on current value and LTGDV on projected completed value — so the lender can assess both.
What does ICR mean in property finance?
ICR stands for interest coverage ratio. It is the ratio of a property’s net rental income to the annual interest payments on the loan. If a property generates 50,000 in net rent per year and the annual interest cost is 35,000, the ICR is 1.43x.
ICR appears primarily in commercial and buy-to-let refinance deals, where the lender needs to confirm that the rental income covers the debt service. Most lenders require a minimum ICR of 1.25x to 1.50x, though stressed ICR calculations (using a higher interest rate to model rate rises) may require higher coverage.
In deal documentation, the ICR calculation should use verified rental income (from a tenancy agreement or rent roll, not the borrower’s estimate) and the actual or proposed interest rate. If the ICR is marginal, the deal summary should address it directly rather than leaving the lender to discover and query it.
What does DIP mean in property finance?
DIP stands for decision in principle. It is a preliminary indication from a lender that they would be willing to lend on a deal, subject to due diligence, valuation, and legal review. A DIP is not a formal offer. It is a signal that the deal fits the lender’s credit appetite at a headline level.
In deal documentation, a DIP from a refinance lender is often used as evidence of the exit strategy. If the borrower’s exit plan is to refinance a bridging loan onto a term product, a DIP from the term lender demonstrates that the exit is realistic, not theoretical.
Lenders care about DIPs as exit evidence because they reduce exit risk. A borrower who can show a DIP for the refinance has a credible path to repayment. A borrower who states “will refinance” without any supporting evidence is asking the lender to trust an unverified assumption.