Hi buddy. We had applied for a home loan as we were looking to purchase a 2 BHK in March. During the process, a friend told me about the LTV ratio. I enquired regarding what is LTV in mortgage and how it can work in my favour. My friend gave me an elaborate answer to help me understand the term. Here is all the information he shared with me.
What is LTV in Housing Loan?
LTV stands for Loan to Value. Now, talking about the LTV ratio can be understood as the percentage of the property or house value that the bank can lend to the borrower. The bank or financial institution is not allowed to lend the complete property value. Thus, it is not possible to disburse the full amount.
Before your loan is approved, the LTV ratio is put into consideration to ensure that the lending amount isn’t greater than the property value. It is preferable to have a lower LTV as there are chances that the lender can give you benefits, such as increased loan tenure and a reduced interest rate. LTV ratio also helps to safeguard the lenders if the property value depreciates.
With this, I would like to conclude my answer. Hopefully, this will guide you to know what is LTV ratio in home loan. Have a good day.
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Authors Of The Question
What is LTV in home loan ?
Shridhar Kuppa
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3 Year
2021-09-21T18:25:27+00:00 2023-10-18T23:51:30+00:00Comment
2 Answers
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