The lowest value principle (or lower of cost or market principle) dictates that, for purposes relating to property mortgage finance or property ownership transfer of any kind, the lower of a property’s realizable market value and the purchasing price (that is the collateral value) takes precedence. The lowest value principle is crucial to mortgage viability checks (see loan-to-value ratio).
Swiss mortgage rates compared
What is a loan-to-value ratio?
What is a second mortgage?
Indirect Amortization - simply explained
Amortization - simply explained