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The formula that a loan to value ratio calculator uses to compute your loan’s LTV ratio is:
LTV= Principal amount/ Market value of your property
So, if the loan amount is Rs.50 lakh and the property’s worth after valuation is Rs.1 crore, The maximum LTV= Rs.50 lakh/ Rs.1 crore= 50%.
Enter the principal amount and property value into the fields and click on ‘Calculate’. For instance, if the loan amount is Rs.1 crore and the property value is worth Rs.2.5 crore, then enter these figures into the appropriate fields. Click on ‘Calculate’ to know the maximum LTV ratio of the loan, which in this case comes to 40%.
The loan to value ratio is generally higher for a residential property than it is for a commercial property. On average, can expect the LTV ratio to be around 10% higher for residential spaces. However, certain industrial properties can also fetch a high LTV. Moreover, the LTV ratio depends on occupancy status as well. Occupied premises tend to yield higher loan amounts than rented or vacant ones, irrespective of whether it’s a residential or commercial property.
In case of a second mortgage, you have a cumulative loan to value ratio. Here the principal of both loans is added and then divided by the market value of the property. So, if your initial loan was worth Rs.50 lakh, your new one is worth Rs.10 lakh and your property’s appraised value is Rs.1 crore, then the cumulative LTV ratio is 60%.
Keep this information on LTV ratios handy to make a smart loan against property borrowing decision!