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What is the Loan to Value Ratio?
How Does the Loan to Value Ratio Work?
The RBI’s Guidelines on the Loan to Value Ratio
The Relationship Between Loan to Value and Home Loan Eligibility
How to Use the LTV Calculator?
The pleasure of owning a home is a dream everyone strives to realise. With owning a home
comes a sense of security and
peace of mind. Moreover, with an uncertain economy, owning property or a home is a necessary
way to own a worthy asset.
However, due to the volatile inflation rate today, becoming a proud homeowner is made
possible largely through a home loan. Some factors to consider after deciding to take a home
loan include the loan's rate of interest, the loan
duration, monthly EMIs, and loan to value ratio (LTV ratio).
ratio is a crucial factor that helps determine whether your home loan application
gets approved. The LTV loan
ratio is greatly valued by lenders, commercial banks, and Non-Banking Financial Companies
(NFBC) because it plays a
vital role in your home loan eligibility.
Since a home loan requires large sums of money, your lender, whether a bank or an NFBC,
employs a variety of risk
estimation models to checkmate the chance of future bankruptcy. The LTV, or the loan amount
to the property value, is
one of the lender's models. The loan to value ratio is the amount of the property or home
value that the bank offers as
the home loan amount. You could also call it the percentage of the property’s value that
your lender can pay. If the
loan to value ratio for your lender is 90%, they offer 90% of the property’s value as the
home loan amount.
Also, you should note that your lender does not view the sale value as an equivalent of the
property’s value. As your
lender considers your home loan bid, it dispatches a team to assess the property or home. A
fair estimation of the
property is the goal of the assessment team. Because of the situation, the lender recognizes
this worth as genuine and
disburses a percentage as the home loan amount. Several Indian banks have a loan to value
ratio of 80%. The percentage
may reach 90% but this exception relies on the borrower’s credit status. The LTV loan ratio
determines the amount of
down payment on the property.
Whether a home loan gets sanctioned or not depends on the loan to value (LTV). To
understand LTV meaning and how to use
calculator, read on.
The loan to value ratio is the absolute amount established on the property value that
will be disbursed as a home loan
amount. To be clear, your lender has a legal right to your property as a form of
security in case you are unable to pay
the loan amount within the specified duration.
The LTV ratio informs you, the home loan seeker, of the exact value of the loan amount
you can receive. It is one of the
major determinants of whether the lender approved your home loan application.
Now that you know the loan to value meaning, read on to learn how the LTV Calculator
The exact home loan amount you receive relies on several factors like the strength of the
property’s security, your home
loan eligibility, an impeccable credit rating, and so on. To decide the loan amount you
receive, your lender utilises
the LTV loan to estimate the home loan amount. With the LTV ratio, you get to know how
much you eventually receive.
Read on to learn the Reserve Bank of India’s guidelines on the loan to value ratio.
The guidelines of the Reserve Bank of India (RBI) or Indian Reserve Bank state that the
LTV loan for home loans can soar
to 90% of the property's worth for home loan amounts up to Rs.30 lakh. The loan to value
is fixed for 80% when the home
loan amounts are over Rs.30 lakh and up to Rs.75 lakh. For home loan amounts over Rs.75
lakh, the loan to value is 75%.
What this means is that for an LTV loan of 90%, you will settle around 10% of the
property's worthwhile the home loan
amount covers the outstanding sum. Knowing the loan to value ratio helps you estimate
the lowest sum you will pay as a
down payment for the property.
The Loan to Value Calculator is an easy way to determine the loan to value ratio for the property your home loan will
purchase. To start with the online LTV Calculator, enter:
Upon completion of these steps, the LTV ratio is determined. Remember that a low loan to value ratio is helpful for a
better interest rate on your loan.
Now that you know the LTV meaning, how it works, and how the LTV calculator operates, click here to use Bajaj Housing
Finance's online loan to value ratio calculator.
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