LTV Ratio for Loan Against Securities Calculator

Calculate the LTV ratio for loan against securities easily and understand the value of your eligible loan amount.
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3 mins read
11-November-2025

The Loan-to-Value (LTV) Ratio is a crucial metric used by lenders to determine the maximum loan amount that can be granted against the value of the securities pledged as collateral. In the context of loans against securities, the LTV ratio represents the percentage of the market value of the securities that can be borrowed. For example, an LTV ratio of 70% means that if you pledge securities worth ₹1,00,000, you can borrow up to ₹70,000. The LTV ratio helps lenders assess the risk associated with the loan and ensures that they have sufficient collateral to cover the loan amount.

What is LTV ratio for loan against securities?

The Loan-to-Value (LTV) ratio determines how much you can borrow against the market value of your pledged securities. It represents the percentage of your investment that a lender is willing to finance.

For example, if your securities are worth Rs. 10 lakh and the LTV is 50%, you can get a loan of up to Rs. 5 lakh. The remaining value acts as a safety buffer for the lender against market fluctuations.

The LTV ratio is set as per SEBI guidelines and varies by security type, typically up to 50% for shares or equity mutual funds, and higher for debt instruments like bonds or fixed deposits.

In short, it balances your liquidity needs with the lender’s risk, ensuring both flexibility and financial safety.

How to calculate LTV ratio for Loan Against Securities

Calculating the LTV ratio for a loan against securities is straightforward. The formula is:

LTV Ratio = (Loan Amount ÷ Market Value of Securities) × 100

Example:

If you wish to borrow Rs. 50,000 and the market value of your pledged securities is Rs. 1,00,000, then:

LTV Ratio = (Rs. 50,000 ÷ Rs. 1,00,000) × 100 = 50%

To learn more about the process and benefits, refer to our detailed section on Loan against Securities

Loan Against Shares
Loan Against Mutual Funds

How to use the loan against securities calculator?

Using an LTV ratio calculator involves a few simple steps:

  1. Input the market value: Enter the current market value of the securities you wish to pledge.
  2. Enter desired loan amount: Input the amount you wish to borrow.
  3. Calculate: The calculator will compute the LTV ratio using the provided values.
  4. Review results: Check the LTV ratio to ensure it meets the lender's requirements.

Factors affecting LTV ratio eligibility

Several factors influence your Loan-to-Value (LTV) ratio eligibility when applying for a loan against securities. Lenders assess both the type and performance of your investments before deciding the ratio.

  • Type of security pledged: The nature of the pledged asset plays a major role. Debt-oriented securities like bonds or fixed deposits often get a higher LTV, while equity shares or mutual funds being market-linked usually have lower ratios due to higher volatility.
  • Market volatility: Frequent price fluctuations in your pledged securities can reduce your eligible LTV ratio. Lenders prefer stable instruments that maintain consistent value over time.
  • Credit profile of the borrower: A strong credit history and repayment track record can help you secure a higher LTV ratio. Lenders view borrowers with good credit scores as lower risk.
  • Lender’s internal policies: Each lender sets its own LTV limits within SEBI guidelines. Factors like portfolio diversification, risk appetite, and liquidity of the pledged securities influence these internal policies.
  • Regulatory guidelines: SEBI and RBI periodically revise norms governing LTV ratios to ensure market stability. These regulations directly impact the maximum LTV that can be offered on specific types of securities.

Benefits of calculating your LTV ratio before applying

Knowing your Loan-to-Value (LTV) ratio in advance can help you make a smarter borrowing decision and plan your finances effectively. Here are the key benefits of calculating it before applying:

  1. Helps estimate your loan amount: By understanding the LTV ratio, you can accurately estimate how much loan you can get against your securities’ market value. This ensures better financial planning and avoids overestimation.
  2. Improves approval chances: Knowing your LTV eligibility helps you apply within the lender’s permissible limits, increasing your chances of quick approval without the risk of rejection.
  3. Enables better portfolio management: Calculating your LTV beforehand allows you to choose which securities to pledge for maximum value while keeping your investments balanced.
  4. Gives control over interest costs: A higher LTV often means borrowing more, which can raise your interest outgo. Pre-calculating the ratio helps you strike a balance between the loan amount and repayment affordability.
  5. Helps prepare for market changes: If your pledged securities are market-linked, knowing your LTV ratio helps you anticipate potential margin calls or loan adjustments during market volatility.

Impact of high LTV ratios on interest rates

Higher LTV ratios usually indicate higher risk for the lender, which can result in increased interest rates. Lenders charge higher rates to compensate for the elevated risk associated with the larger loan amount relative to the collateral value. Borrowers with higher LTV ratios may find their overall cost of borrowing increases, making it crucial to evaluate whether the higher loan amount is worth the additional expense. For more insights, explore our guide on Loan Against Shares

Conclusion

In conclusion, understanding the Loan-to-Value (LTV) ratio is essential for anyone considering a loan against securities. The LTV ratio determines the maximum loan amount based on the value of pledged securities, impacting interest rates and loan terms. By calculating the LTV ratio accurately and considering factors influencing it, borrowers can make informed decisions to optimize their financial benefits. Lower LTV ratios generally offer better loan conditions, while higher ratios can result in increased interest rates. Effective use of LTV ratio calculators and understanding eligibility criteria can further enhance the borrowing experience.

Frequently asked questions

What is the ideal LTV ratio for a loan against securities?
The ideal Loan-to-Value (LTV) ratio for a loan against securities is typically between 50% and 80%. This ensures a balance between the lender’s risk and the borrower’s access to credit while maintaining a reasonable margin for market fluctuations

Is the LTV ratio different for stocks, mutual funds, or fixed deposits?
Yes, LTV ratios vary depending on the type of security. Fixed deposits typically have higher LTV ratios due to lower risk, while stocks and mutual funds have lower ratios because of market volatility

Does a higher LTV ratio mean higher interest rates?

Not always. While a higher Loan-to-Value (LTV) ratio may slightly increase risk for the lender, interest rates depend on multiple factors like borrower profile, pledged security type, and lender policies. Competitive lenders may offer attractive rates even with higher LTVs for quality securities.

How can I get a better loan amount using the LTV ratio?

To maximise your loan amount, pledge high-value, liquid, and SEBI-approved securities. Since LTV is applied to the current market value of your investments, choosing well-performing shares or mutual funds can help you unlock a higher eligible loan amount.

What is the maximum LTV allowed for loans against shares and mutual funds?

As per RBI guidelines, the LTV ratio for Loan Against Mutual Funds and shares goes up to 90%, depending on the type of security and lender policies. Some NBFCs may offer customised LTVs based on your risk profile and investment quality.

Does the LTV ratio change with market fluctuations?

Yes, LTV ratios are directly affected by market movements. If the value of your pledged securities drops, your LTV increases, potentially triggering a margin call. Regularly monitoring your portfolio helps maintain LTV within the acceptable limit and avoid top-up or partial repayment requests.

Does a higher LTV ratio mean higher interest rates?

Not always. While a higher Loan-to-Value (LTV) ratio may slightly increase risk for the lender, interest rates depend on multiple factors like borrower profile, pledged security type, and lender policies. Competitive lenders may offer attractive rates even with higher LTVs for quality securities.

How can I get a better loan amount using the LTV ratio?

To maximise your loan amount, pledge high-value, liquid, and SEBI-approved securities. Since LTV is applied to the current market value of your investments, choosing well-performing shares or mutual funds can help you unlock a higher eligible loan amount.

How is the LTV ratio calculated for loans against securities?

LTV is calculated by dividing the loan amount by the current market value of pledged securities, then multiplying by 100. For example, if your mutual funds are worth Rs. 10 lakh and the lender offers 50% to 90% LTV, your eligible loan amount would be Rs. 5 lakh.

What is the maximum LTV allowed for loans against shares and mutual funds?

As per RBI guidelines, the LTV ratio for Loan Against Mutual Funds and shares goes up to 90%, depending on the type of security and lender policies. Some NBFCs may offer customised LTVs based on your risk profile and investment quality.

Does the LTV ratio change with market fluctuations?

Yes, LTV ratios are directly affected by market movements. If the value of your pledged securities drops, your LTV increases, potentially triggering a margin call. Regularly monitoring your portfolio helps maintain LTV within the acceptable limit and avoid top-up or partial repayment requests.

Is the LTV ratio fixed or does it change over time?

The LTV ratio is not fixed; it can change based on market fluctuations. If the value of your pledged securities rises or falls, the lender may adjust the LTV ratio accordingly to manage risk.

What types of securities are accepted for loan against securities?

Lenders typically accept listed shares, mutual funds, bonds, government securities, and insurance policies (like ULIPs and endowment plans) as collateral. The eligibility of each security depends on the lender’s policies and regulatory guidelines.

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