What is Loan-to-Value (LTV) Ratio?
Your lender considers several factors before approving your requested loan amount. One of these factors is the LTV or loan-to-value ratio. An LTV is a percentage of the property's value that can be financed through a loan. The borrower needs to cover the remaining amount from their own funds.
Assume the lender permits an LTV ratio of 70% of the property value. If your property is valued at Rs.1 Crore, you will be permitted to borrow up to Rs.70 Lakh, provided you meet the lender's other eligibility criteria.
Note that this example is explanatory and is not to be relied on for actual LTV calculations during loan preparations.
Additional Read: Understanding Stamp Duty and Property Registration Charges
The RBI’s Guidelines on the Loan to Value Ratio
The Reserve Bank of India (RBI) has a set of guidelines for the LTV ratio on Home Loans.
- Lenders can sanction up to 90% of the property’s value for Home Loan amounts worth Rs.30 Lakh
- Lenders can sanction up to 80% of the property’s value for Home Loan amounts ranging between Rs.30 Lakh and Rs.75 Lakh
- Lenders can sanction only up to 75% of the property’s value if the Home Loan amount exceeds Rs.75 Lakh
How to Calculate the Loan-to-Value Ratio?
Loan-to-value (LTV) ratio can be calculated by simply dividing the loan amount by the value of the asset or collateral being borrowed against it. In case of a mortgage, this amount would be the mortgage amount divided by the property's value. Homebuyers can manually calculate the LTV ratio of a home by using this formula:
LTV = (Amount owed on the loan ÷ Appraised value of asset) × 100
How to Use the Loan-to-Value (LTV) Calculator?
Employing the help of a loan-to-value calculator is an easy way to determine what percentage of your property’s value you stand to receive as a Home Loan. To start with the online LTV Calculator, enter:
- Provide the estimated value of your property
- Select the type of property: residential or commercial
- Enter your own monthly income and obligations
- Select the interest rate you want
- Select your preferred repayment tenor
The calculator window will present the maximum loan amount you are eligible for based on the value of your property and the LTV ratio. This can help you tailor your Home Loan application and play to your strengths, to ensure that you are eligible for speedy approval.
What is a Good Loan-to-Value Ratio?
If you're taking out a loan to buy a home, the percentage of 80% or less is considered an ideal LTV in Housing Finance. An LTV above 80% is considered to be a high, meaning the borrowers may face higher borrowing costs, require private mortgage insurance, or be denied a loan. Even higher LTVs such as above 95% are considered unacceptable.
Why is Loan-to-Value Ratio (LTV) Important?
LTV is an important consideration in your Home Loan calculations as it determines your future EMIs. LTV in housing finance plays a big role in determining your EMI amount - the higher the LTV, the smaller your EMIs will be. Effectively, higher LTVs mean a higher amount going out as interest towards your loan. On the other hand, a lower LTV may reduce your EMI.
Conclusion
Whether you're applying for a Home Loan or a Loan Against Property, it's important to understand how your LTV ratio affects overall cost of borrowing, the steps you can take to bring down the LTV, and the money you can save by doing so.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
Trending Articles
loan+against+property Loan Against Property
[N][T][T][N][T]
Things You Need to Know Before Applying for a Loan Against Property2024-12-02 | 3 min
loan+against+property Loan Against Property
[N][T][T][N][T]
How Can a Loan Against Property Help You Expand Your Business?2024-12-02 | 5 min
home+loan Home Loan
[N][T][T][N][T]
3 Smart Tips for Refinancing Your Home Loan2024-12-03 | 3 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Benefits of Loan Against Property EMI Calculator2024-12-03 | 3 min
[N][T][T][N][T]
How to Choose the Right Home Loan2024-11-26 | 4 min
[N][T][T][N][T]
Common Charges Associated with a Home Loan2026-01-02 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Top 5 Home Loan Benefits for First-time Woman Buyers2024-05-14 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Hybrid Flexi Loan vs. Personal Loan: Which One is Better?2024-01-24 | 3 min
[N][T][T][N][T]
3 Ways to Reduce Your EMIs with a Home Loan Balance Transfer2024-05-08 | 5 min
cibil Cibil
[N][T][T][N][T]
What Does Your Credit Score Tell About You?2024-06-11 | 5 min
home+loan Home Loan
[N][T][T][N][T]
All You Should Know About Home Loan Disbursement and Sanctioning Process2024-03-19 | 3 Min
home+loan Home Loan
[N][T][T][N][T]
What Is a Pre-Approved Home Loan and How Should You Get It Done?2024-03-12 | 5 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Top Benefits of a Loan Against Property Over Collateral-Free Loans2024-01-09 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Can I Take a Home Loan and a Personal Loan Together?2024-01-17 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan vs Loan Against Property: A Complete Comparison2023-11-29 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Difference Between Home Loan and Personal Loan: Which is better?2024-03-04 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Why Should You Choose a Balance Transfer on Your Home Loan?2023-02-01 | 4 min
cibil Cibil
[N][T][T][N][T]
How Does Being A Loan Guarantor Affect Your Credit Score?2024-03-13 | 4 min
cibil Cibil
[N][T][T][N][T]
How Business Loans Affect Your CIBIL Score & How to Improve the Same2024-03-13 | 6 min
cibil Cibil
[N][T][T][N][T]
How Can Customers Check Their Credit History?2023-06-14 | 3 min
cibil Cibil
[N][T][T][N][T]
How Can Your CIBIL Score Help in Negotiating Better Home Loan Deals2023-05-18 | 4 min
cibil Cibil
[N][T][T][N][T]
Here Is How a Bounced Cheque Can Affect Your CIBIL Score2023-06-06 | 5 min
cibil Cibil
[N][T][T][N][T]
What is Credit Mix and How to Boost Your Credit Score?2023-03-27 | 7 min
home+loan Home Loan
[N][T][T][N][T]
How Can Your Credit Score Impact Your Home Loan Interest Rate?2024-02-13 | 6 min
cibil Cibil
[N][T][T][N][T]
How Does Your Digital Footprint Affect Your CIBIL Score?2024-03-20 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How Digital Platforms Are Revolutionising the Face of Housing Finance2023-12-21 | 7 min
cibil Cibil
[N][T][T][N][T]
How Does Missing One Payment Affect Your CIBIL Score?2024-05-15 | 4 min
loan+against+property Loan Against Property
[N][T][T][N][T]
5 Important Reasons to Opt for a Loan Against Property to Start Your Own Business2023-02-10 | 2 min
home+loan Home Loan
[N][T][T][N][T]
Differences Between Fixed and Floating Interest Rates2024-05-15 | 2 min
home+loan Home Loan
[N][T][T][N][T]
How to Get a Better Interest Rate on Your Home Loan2024-01-04 | 5 min
[N][T][T][N][T]
Everything You Need to Know About Home Loan Tax Benefits2024-04-23 | 6 min
home+loan Home Loan
[N][T][T][N][T]
A Complete Guide for Home Loan Insurance2023-04-03 | 4 min
[N][T][T][N][T]
Loan Against Property for Doctors: An Essential Checklist2024-05-07 | 2 min
home+loan Home Loan
[N][T][T][N][T]
Understanding Loan-to-Value Ratio (LTV) and its Calculation2023-11-28 | 4 Min
tax Tax
[N][T][T][N][T]
Everything You Should Know About Tax Savings When Taking a Home Loan2023-01-09 | 5 min
cibil Cibil
[N][T][T][N][T]
How to Check, Calculate, and Improve CIBIL Score?2024-01-11 | 2 min
home+loan Home Loan
[N][T][T][N][T]
Everything You Need to Know About Top-up Loans on a Home Loan2024-04-09 | 6 min
cibil Cibil
[N][T][T][N][T]
Everything You Should Know About Your CIBIL Score2024-02-09 | 7 min
home+loan Home Loan
[N][T][T][N][T]
What Factors Decide Your Home Loan Interest Rates?2024-05-29 | 6 min
cibil Cibil
[N][T][T][N][T]
What Factors Do Not Affect Credit Scores?2024-02-28 | 7 min
home+loan Home Loan
[N][T][T][N][T]
Factors Determining Your Home Loan Eligibility2024-03-13 | 4 min
cibil Cibil
[N][T][T][N][T]
How can I Remove Loan Inquiry from CIBIL Credit Report2024-01-22 | 5 min
cibil Cibil
[N][T][T][N][T]
Check CIBIL Score with PAN Card for Free, in 3 Steps2024-02-27 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How to Pick the Best Home Loan Tenor that Suits Your Budget2023-06-29 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Common Mistakes to Avoid When Applying for a Home Loan2023-12-04 | 2 min
home+loan Home Loan
[N][T][T][N][T]
Common Myths About Home Loans: All You Need to Know2024-04-08 | 5 min
cibil Cibil
[N][T][T][N][T]
10 Common Myths About CIBIL Score2024-03-27 | 4 min
home+loan Home Loan
[N][T][T][N][T]
7 Common Problems You May Face While Applying For Home Loan2024-01-18 | 7 min
tax Tax
[N][T][T][N][T]
Comparison Between New Tax Regime vs Old Tax Regime2024-04-10 | 5 min
cibil Cibil
[N][T][T][N][T]
A Helpful Guide to Understanding Your Credit Report2024-01-26 | 5 min
cibil Cibil
[N][T][T][N][T]
Introduction to Credit Information Bureau India Limited (CIBIL)2024-04-15 | 6 min
cibil Cibil
[N][T][T][N][T]
Difference Between Credit Score and CIBIL Score2024-02-15 | 5 min
home+loan Home Loan
[N][T][T][N][T]
What is the Difference Between Top-up Loan and Home Improvement Loan2023-01-11 | 5 min
tax Tax
[N][T][T][N][T]
Difference Between Old vs. New Tax Regime2024-08-22 | 5 min
home+loan Home Loan
[N][T][T][N][T]
6 Point Differentiation Between Home Loan Vs Home Construction Loan2023-02-15 | 6 min
cibil Cibil
[N][T][T][N][T]
Does a Name Change Affect Your Credit Score2024-01-07 | 4 min
cibil Cibil
[N][T][T][N][T]
Does Applying for Credit Affects One's CIBIL Score?2024-03-14 | 3 min
cibil Cibil
[N][T][T][N][T]
Does CIBIL Score Affect Loan Against Property Eligibility?2023-02-15 | 7 min
cibil Cibil
[N][T][T][N][T]
Will a Loan Settlement Ruin My CIBIL Score?2023-03-21 | 4 min
home+loan Home Loan
[N][T][T][N][T]
What is Foreclosing a Home Loan? These are Some of the Do’s and Don’ts2023-12-20 | 6 min
cibil Cibil
[N][T][T][N][T]
Easy Ways to Maintain a Good Business Credit Score2024-01-10 | 5 min
cibil Cibil
[N][T][T][N][T]
10 Effective Strategies for Boosting Your Credit Rating2023-03-24 | 6 min
loan+against+property Loan Against Property
[N][T][T][N][T]
What Are the Eligibility Criteria for Obtaining a Loan Against Property?2023-03-28 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Benefits of Submitting a Digital Home Loan Application in Current Times2023-12-20 | 4 min
tax Tax
[N][T][T][N][T]
Top Benefits of Using an Online Income Tax Calculator2023-12-28 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Best Credit Score for Home Loans & How to Improve Yours2023-08-31 | 6 min
home+loan Home Loan
[N][T][T][N][T]
Get Your Down Payment Funds Ready with These 5 Easy Steps2023-03-20 | 5 min
cibil Cibil
[N][T][T][N][T]
Boost Your Credit Score By Minding The Factors That Affect It2023-03-20 | 5 min
home+loan Home Loan
[N][T][T][N][T]
What Happens If Home Loan EMI Bounces? Know the Consequences2024-07-11 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Would it be Possible for Me to Apply for a Second Mortgage?2024-05-22 | 3 min
cibil Cibil
[N][T][T][N][T]
How to Check Your CIBIL Score for Free and What to Do If There Are Errors in It2024-06-05 | 4 min
[N][T][T][N][T]
Checklist of Documents Required for Home Loan2024-02-07 | 5 min
cibil Cibil
[N][T][T][N][T]
CIBIL Score Charges & Services You Must Know2023-04-04 | 2 min
cibil Cibil
[N][T][T][N][T]
What to Know About CIBIL Score 2.02024-06-20 | 3 min
tax Tax
[N][T][T][N][T]
Can I Claim Home Loan Tax Benefits on an Under-Construction Property?2024-05-23 | 5 min
tax Tax
[N][T][T][N][T]
How to Claim Tax Benefits on Joint Home Loans2024-07-10 | 4 min
cibil Cibil
[N][T][T][N][T]
Some of the Common Credit Mistakes to Avoid2023-03-21 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Advantages of Including a Co-Applicant on Your Home Loan2024-01-21 | 7 min
home+loan Home Loan
[N][T][T][N][T]
A Complete Guide on the Benefits of Joint Home Loan2022-11-16 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan Balance Transfer: Benefits, Eligibility, and More2024-05-15 | 3 Min
home+loan Home Loan
[N][T][T][N][T]
Advantages for First-Time Home Buyers2023-07-14 | 4 min
home+loan Home Loan
[N][T][T][N][T]
An Essential Guide to Refinancing a Home Loan2024-04-22 | 5 Min
home+loan Home Loan
[N][T][T][N][T]
All About Home Loan Balance Transfers2024-06-04 | 4 mins
home+loan Home Loan
[N][T][T][N][T]
All You Need to Know About Home Loans2023-01-19 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Should I Apply for a Pre-Approved Home Loan or an After Property Finalisation Loan?2024-03-15 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Are Registration Charges Compulsory When You Opt for a Home Loan?2024-04-15 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How to Connect with Bajaj Housing Customer Care2023-06-27 | 5 Min
home+loan Home Loan
[N][T][T][N][T]
Difference Between Bank Rate and Repo Rate2023-09-22 | 5 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Fees and Charges on Your Loan Against Property2024-02-16 | 8 min
loan+against+property Loan Against Property
[N][T][T][N][T]
3 Different Loan Against Property Types You Should Know About2024-02-13 | 5 Min
tax Tax
[N][T][T][N][T]
What Does It Mean to Have a CIBIL Score of -12023-06-16 | 4 min
cibil Cibil
[N][T][T][N][T]
How To Improve CIBIL Score After A Payment Default?2024-03-29 | 4 min
cibil Cibil
[N][T][T][N][T]
How to Increase Your CIBIL Score Above 800: 6 Proven Methods2024-01-24 | 4 min
[N][T][T][N][T]
5 Ways Home Loan Borrowers Can Lower their Home Loan EMI2023-01-04 | 4 min
home+loan Home Loan
[N][T][T][N][T]
6 Ways to Reduce Your Home Loan Interest2024-03-20 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Factors to Consider Before Applying for a Home Construction Loan2022-12-02 | 5 min
tax Tax
[N][T][T][N][T]
Know all About Top Up Loans and How to Avail of Tax Benefits2024-07-16 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Benefits of a Home Loan2023-02-20 | 4 min
tax Tax
[N][T][T][N][T]
Tax Benefits on Home Loans for Self-Employed Individuals: What You Need to Know2024-06-07 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan Burden Management: Five Tips2022-06-27 | 3 min
home+loan Home Loan
[N][T][T][N][T]
How to Pay Off Your Home Loan Quicker2024-03-11 | 4 Min
[N][T][T][N][T]
Everything You Must Know About NRI Home Loans2024-02-16 | 3 min
[N][T][T][N][T]
NRI Home Loans: 5 Things to Keep in Mind Before Applying2024-02-15 | 4 min
[N][T][T][N][T]
Myths and Facts About NRI Home Loans in India2024-02-15 | 4 min
tax Tax
[N][T][T][N][T]
How to Save Tax for Salary Above 30 Lakh?2023-08-07 | 6 min
tax Tax
[N][T][T][N][T]
How to Claim Home Loan Tax Exemptions and HRA Together2023-03-22 | 5 min
tax Tax
[N][T][T][N][T]
Income Tax Structure in New Regime: New Tax Exemption Limit 20232024-05-08 | 4 min
tax Tax
[N][T][T][N][T]
How Much Tax Can be Saved Under Sections 80C, 80D, and 80G?2024-05-15 | 5 min
tax Tax
[N][T][T][N][T]
How to Save Tax Between Rs 20 to Rs 25L Salary in India2024-05-23 | 6 min
tax Tax
[N][T][T][N][T]
8 Useful Income Tax Exemptions for Salaried Employees2024-04-18 | 7 min
tax Tax
[N][T][T][N][T]
Should You Get a Home Loan to Save Your Taxes?2024-02-01 | 3 min
home+loan Home Loan
[N][T][T][N][T]
Section 80EE: Claim Deductions on the Home Loan Interest Paid2024-04-25 | 6 min
tax Tax
[N][T][T][N][T]
How to Avail Maximum Home Loan Tax Benefit in India in 2023?2024-05-13 | 6 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Things to Do If Your Loan Against Property Application Gets Rejected2023-02-14 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Smart Things to Consider Before You Apply for a Home Loan2022-12-14 | 5 min
[N][T][T][N][T]
Loan Against Property or A Home Loan: Know What You Need2024-06-11 | 5 min
[N][T][T][N][T]
Top 5 Ways to Avail of Tax Benefits on Home Loans2024-02-16 | 5 min
[N][T][T][N][T]
NRI Home Loans: Unveiling the Unique Aspects2024-02-14 | 7 min
[N][T][T][N][T]
A Guide for NRIs Considering Property Purchase in India2024-02-14 | 7 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Pay-off Your Debt with Bajaj Housing Finance Loan Against Property2024-02-14 | 5 min
tax Tax
[N][T][T][N][T]
Claim Tax Exemptions with These 3 Loan Options2023-02-22 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Reasons Why a Housing Loan Application May Be Rejected2024-02-14 | 3 min
home+loan Home Loan
[N][T][T][N][T]
Types of Home Loan Charges2024-01-22 | 3 Min
home+loan Home Loan
[N][T][T][N][T]
Should You Take a Home Loan Even If You Have Enough Money to Buy a House?