Loan to Value Calculator_WC
Lap Loan To Value Calculator
What is Loan-to-Value Ratio_WC
What is Loan-to-Value Ratio?
The loan-to-value ratio, or LTV, denotes the percentage of a property’s actual price that can be obtained as a loan. It denotes the maximum amount of financing you are entitled to receive against the pledged property. The LTV ratio ranges between 40% and 75% for a Loan Against Property. This ratio can vary depending on whether the pledged property is residential or commercial, and self-occupied, rented, or vacant.
LTV ratio calculation is strictly based on the property’s recent valuation report. While one can obtain up to 70–75% of the property value as a loan, the exact amount varies as per your profile and the property in question.
Use a Loan Against Property EMI Calculator to determine the amount and tenor you are comfortable with to make an informed decision. Besides the highest loan amount eligibility, the LTV ratio is a measure of the perceived risk of lending.
How is LTV calculated_Wc
How is LTV calculated?
The loan-to-value ratio is calculated by taking the maximum amount you are eligible to borrow and dividing it by the pledged property’s appraised value. The result can be multiplied by 100 to express this ratio in percentage.
Take the following table as an example to understand how LTV is calculated.
|Property value||Rs.80 lakh|
|Amount borrowed||Rs.48 lakh|
The highest sum you can borrow against a pledged property is determined based on this calculation. It is possible to get a lower loan amount as per your requirements. You should note that a lower LTV implies mitigated risk and better loan terms.
What is the LTV Calculation Formula_WC
What is the LTV Calculation Formula?
The LTV ratio formula uses two variables, namely the pledged property’s current market value and the loan quantum you are eligible for. It can be expressed as:
LTV Ratio Formula = (Loan amount/Property’s market value) * 100
For example, suppose a property is valued at Rs.2.5 Crore, and you are eligible for a loan amount of Rs.1.75 Crore. As per the loan-to-value ratio formula, LTV ratio will be [(17500000/25000000) * 100] or 58.33%.
Usually, the maximum loan amount for which you are eligible can differ for residential and commercial properties. In most cases, a residential property fetches a higher LTV ratio than a commercial property.
You can use the Loan Against Property Calculator to get an estimate of the maximum obtainable loan quantum. However, note that several factors are considered for computing the total loan amount you can avail of. For instance, the pledged property’s occupancy status is an essential loan-to-value ratio determinant.
How to Use the Loan-to-Value Ratio Calculator_WC
How to Use the Loan-to-Value Ratio Calculator?
The loan-to-value calculator comprises five fields. These are:
Tenor (in months)
Follow the steps below to use a loan-to-value ratio calculator:
Select whether you are a self-employed or a salaried individual.
Choose between a residential or commercial property type.
Enter property’s current market value.
You can view the eligible loan amount instantly after inputting these variables. To view the EMI amount, interest payable, and total payable amount, you need to enter a suitable tenor in the mortgage LTV calculator. You can also tune the term as per your convenience to determine an EMI you are comfortable bearing every month.
However, the instalment amount can vary when you actually apply for a Loan Against Property based on your eligibility and applicable interest rate. The LTV ratio calculation can also differ depending on specific factors.
Factors That Affect LTV Calculation_WC
Factors That Affect LTV Calculation
LTV ratio calculation is subject to various factors concerning the property itself and the applicant. These three aspects of the pledged property are vital in this respect:
|Property Type||Residential properties attract higher LTVs than their commercial counterparts. It can be higher by 10% in some cases. Nonetheless, LTVs for specific commercial properties are also high.|
|Location||The property’s location is significant to its saleability and the LTV ratio it fetches. Residential properties in high-end localities will attract a higher loan to value ratio than those in localities with fewer amenities. It’s the same for commercial properties.|
|Property Age||An old property will have a lower sale value and, thus, invite a lower LTV ratio than a newer property.|
To calculate a loan-to-value ratio, lending institutions also check the following factors:
Credit score: A healthy credit score, preferably above 750, invites a high loan-to-value ratio and vice versa
FOIR: A fixed income-to-obligation ratio within the range of 40–50% is conducive to a higher LTV ratio
Work experience: A prolonged work experience will attract a more significant loan to value ratio; you can be either salaried or self-employed
Your age is also crucial in LTV calculation for Home Loan and Loan Against Property.
Loan to Value Calculator FAQs
LTV represents the relationship between the eligible loan amount and the property’s current market value. The loan-to-value ratio is the highest percentage of your property’s value that a lender will finance. Lending institutions use this ratio for all types of secured financing options, including but not limited to loan against property and home loan. A borrower can obtain any loan amount up to the maximum LTV but not exceeding that.
Lenders check several factors to determine the LTV ratio, including property type, age and location, the applicant’s credit score, income profile, debt-to-income ratio, and work experience. Loan to value is higher for residential properties in most cases. New properties and/or ones located in areas with improved amenities attract more significant loan to value ratios.
The LTV ratio for a mortgage loan is calculated by dividing the available loan quantum by the pledged property’s current value and then multiplying it by 100. It is expressed in percentage mostly. If the eligible loan amount is Rs.1 crore and the mortgaged property’s value is Rs.2 crore, the loan to value ratio is 50%. One may use a loan-to-value ratio calculator to compute the same.
This online calculator requires three inputs primarily to that end, namely, employment type, property type and its current market value. Select whether you are salaried or self-employed, if the property is commercial or residential, and then enter its latest value to check the loan amount for which you are eligible. Divide that sum by your property’s value and multiply it by 100 to calculate the loan to value ratio for a mortgage loan.
The sum differs based on whether the mortgaged property is a house or a commercial property. Depending on whether it’s self-occupied, rented, or vacant, a house fetches a high loan to value ratio compared to a commercial asset. The LTV ratio for a mortgage loan on a self-occupied property is significantly higher than one that is vacant or rented.
The mortgage loan-to-value ratio measures the correlation between an immovable property’s current price in the market and the loan quantum you can take out against it. This ratio is expressed in percentage. A mortgage loan-to-value calculator can be used to find out the LTV you are eligible for. The primary factor in this calculation is the property type. Occupancy status is also a vital aspect that influences this ratio. These are directly associated with how sellable an immovable asset is.
A second mortgage on the same property adds to the previous loan-to-value ratio. Suppose you have an existing mortgage loan of Rs.35 Lakh on an Rs.80 Lakh property. You decide to mortgage the property a second time to borrow a sum of Rs.20 Lakh. The LTV ratio was 43.75% in the first case. An additional loan of Rs.20 Lakh increases the loan-to-value ratio to 62.5%. You can use a mortgage loan-to-value calculator to determine the cumulative LTV you are eligible for.
Taking out a second mortgage on a property is more cumbersome than the first. You can consider a top-up loan from your current lender if you did not obtain the entire amount for which you were eligible in the first case. You can also obtain a new loan on your immovable property. However, the eligibility criteria for a fresh, second mortgage loan are more rigid.
Generally, these criteria include an applicant’s age, credit score, occupation type and status, and the mortgaged property’s current value and age. Current debt-to-income ratio is a crucial criterion in this regard. Ideally, existing obligations should not account for more than 60–80% of an applicant’s income to be deemed eligible for a second mortgage loan. Nonetheless, it’s wise to use a mortgage LTV calculator to make an informed choice before taking out a second mortgage.
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Loan Against Property Loan To Value Calculator_PAC_WC