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Home / Finance / Home Loan / What is LTV in home loan ?
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What is LTV in home loan ?

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0 2023-10-18T23:50:29+00:00
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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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1 2021-09-21T18:45:52+00:00
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So, what is LTV in banking? The comparison between the ratio of the amount of loan a bank will lend against the total value of the property you purchase is the Loan to Value ratio (LTV) in banking. This is the simple definition of LTV in home loan. How to calculate LTV Ratio for housing loan? You will get the LTV ratio if you divide the amount borrowed by the value of the property and then multiply it by a hundred. LTV Ratio for home loan = The borrowed amount/ The value of property X 100. I will give an example of how to calculate LTV. If you buy a house worth 1 crore  and the maximum amount the bank can lend you is 70 lakh, then the LTV ratio of the bank is 70% Eligibility for LTV ratio for housing loan  If your LTV is lower, you have a higher chance to get a home loan. If your LTV is low there is also a high chance that you will get a better interest. Your lender will tell you about your LTV ratio and if it is on the lower side you can negotiate with the lender to assist you in decreasing the interest rates, giving longer tenure to pay the loan. I hope you know what is LTV in banking. If you are looking to take a home loan from NoBroker's partner banks, then you should start the process by checking your eligibility using Home Loan Eligibility Calculator:

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