Sat. Nov 28th, 2020

The LTV Calculator is one of the key tools that are used in the financial world. 

It is used when you want to avail the mortgage loan. LTV Calculator stands for Loan to Value ratio. 

If you wish to know everything about the LTV Calculator, then first you ought to know about the Loan to Value. Read on this post and know more!

What is meant by the Loan to Value ratio?

LTV or Loan to Value is a ratio of the loan money you can get as per the property’s market value. Generally, the loan to value ratio for the mortgage loan or the loan against property ranges between 40 and 75% of the calculated value of your property. LTV is what informs you about the maximum financing amount that you can get. It is based on the property that you are keeping as collateral to secure the mortgage loan. 

What is the significance of the LTV?

Once you are aware of the maximum finance that you can get while pledging your property, you can now use the mortgage loan EMI Calculator. The tool can help you determine the monthly expenses if you apply for the loan. 

If you wish to calculate your loan to value ratio, then you need to use the Loan to Value Calculator and enter the required loan money and your property’s market value. 

What is the LTV formula used in the LTV Calculator?

The formula used in the LTV Calculator to calculate the LTV ratio of the loan is: 

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LTV = Principal amount or property’s market value. 

Thus, if your loan amount is Rs.50 lakh and the worth of your property is determined at Rs.1 crore, then the highest LTV = Rs.50 lakh/Rs.1 crore = 50%. 

How to use the LTV Calculator?

Using the Loan to Value Calculator is quite simple. You need to enter the principal loan amount and the value of your property on the LTV Calculator. Once entered, you will need to click on the ‘Calculate’ button. Once you click on the ‘Calculate’ button, the LTV Calculator will showcase the exact and maximum LTV ratio of the loan. 

Does the Loan to Value differ as per the type of property?

The LTV value of the residential property is greater than that of the commercial property. Averagely, the Loan to Value of the residential property is about 10%. But some industrial properties can also help you get a higher Loan to Value ratio. What’s more, the LTV ratio is determined by the occupancy status of a premise as well. The buildings that are occupied can yield a larger loan amount than those that are vacant. And it is irrespective of the fact whether it is a commercial or residential property. 

Are there any factors affecting the LTV that you might be eligible for?

Before adjusting the LTV, the lenders offering you the facility of the mortgage loan consider aspects such as your age, existing financial liabilities and your credit score. The higher is your working years, the better is your chances of availing a considerable loan amount with a long tenor. What’s more, you should also maintain a lower debt-to-income ratio of 50%. It can help you get the approval for the loan against property. Your cibil score is another key factor that is taken into consideration. It is because it showcases your creditworthiness. If you have a credit score of 750 or more, then you can get greater LTV ratios and avail a lower rate of interest. 

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You are now aware of the basics of the LTV Calculator. If you have a loan against property to apply, then you can use the Loan to Value Calculator. This way, you can know how much you will borrow quickly. 

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