Understand LTV easily and know how much loan you can get against your property

While giving home loan, the bank approves the loan after looking at your income proof, credit history, internal due dijsions.

This loan-to-value (LTV) or loan-to-cost ratio is the ratio of the loan amount that can be given to the total value of the property

Whenever you want to buy a house by taking loan or thinking of buying a car or factory by taking loan, the first question that comes in your mind is how much loan will you get. Because the bank never gives you 100% loan. How much loan you will get depends on your LTV. So let’s know what is LTV and how it affects your property buying.

How is LTV Calculated?

This loan-to-value (LTV) or loan-to-cost ratio is the ratio of the loan amount that can be given to the total value of the property. The property range of LTV can be from 75 per cent to 90 per cent and it depends on the borrower’s relationship with the bank and the scheme. Apart from this, the risk profile is also taken into account, higher LTV means bigger loan amount and hence you have to arrange less down payment out of your pocket but pay higher EMI. On the other hand, lower LTV means that you will have to pay more money as down payment.

Suppose you want to buy a flat and its value is Rs 50 lakhs and the bank is giving you a loan of Rs 40 lakhs, then its mean LTV will come out to be 80 percent, that is, 10% you will have to make a down payment, most of the banks house, car, gold Or for any other loan, only 80 percent of the asset value lends, the higher LTV increases the risk of the bank.

What type of property will the bank mortgage

The bank mostly mortgages residential property, commercial property, industrial property and vacant land. Agriculture will not think of mortgaging the land. Generally LTV is calculated on home loan and loan against property only. The bank calculates 75% LTV on the house where you are living i.e. self-occupied property and 65% LTV if it is rented.

Who will get more LTV

The bank does not give loans only against the valuation of the property. While giving home loan, the bank approves the loan after looking at your income proof, credit history, internal due dijsions. If your CIBIL score is more than 750 then you can get loan up to 90%. Apart from this, up to 90% loan can be available for loan less than Rs 35 lakh. If you are young then there are chances of getting more loan. Some banks also consider stamp duty and registration charges if you want to take more loan. Sometimes the interest rate also increases in case of high LTV. That is, if you want to take 90% LTV, then the interest rate can change from 7% to 7.5%.

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