Loan to Value (LTV) Calculator
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Loan to Value Calculator: Process and How to Use
What Is Loan To Value Ratio?
Upon knowing the maximum loan value you are eligible for, you can use the Loan Against Property EMI calculator to determine your monthly outgo, should you apply for the loan. To get started with calculating LTV, enter your desired loan amount and market value of your property in an LTV calculator.
What Is The LTV Formula?
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%.
How To Use The Loan To Value Calculator?
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%.
Does The LTV Vary As Per The Type Of Property?
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.
What Other Factors Affect The LTV Ratio That You Are Eligible For?
Can You Take A Second Mortgage?
Here, the property is treated on a pari passu basis, meaning that both lenders can exercise legal rights in case of default, based upon the amounts lent to you. Loan against property eligibility terms are more stringent here.
How Does A Second Mortgage Impact Loan To Value?
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!
