The Loan-to-Value (LTV) ratio is an important metric that helps determine the amount of credit you can secure using your crypto as collateral. This ratio is calculated by dividing the amount of credit you have borrowed by the value of your collateral, expressed as a percentage.
For instance, if you borrow $100 worth of USDC and the value of your BTC collateral is $1000, your LTV will be 10% (100 / 1000 = 10%).
Monitoring Your LTV
It is crucial to keep an eye on your LTV, which can be monitored in real-time within the Wirex App. If you find that your LTV is getting too high (for example, approaching 70%), you can add more collateral to your existing credit line to bring the LTV back to a healthy level.
When opening a new line of Wirex Credit, the maximum amount of credit you can secure is 60% LTV (80% LTV when borrowing NXUSD). It is essential to stay aware of the current market rates, as the LTV can change over time. If the LTV reaches 80% for stablecoins or 90% for NXUSD, your collateral will be liquidated, and the credit line will be automatically closed.
Flexible Repayment Options
Wirex Credit offers complete flexibility, allowing you to repay the borrowed amount in full at any time or add more collateral to reduce the LTV. There is no need for fixed monthly repayments. Whenever you are ready, you can repay the outstanding balance, which consists of the capital borrowed and any interest accrued.
In conclusion, understanding the LTV ratio and monitoring it regularly can help you make the most out of your Wirex Credit line while keeping your collateral safe.