BANKING AFFAIRS

Detailed explanation-1: -A loan-to-value (LTV) ratio in home loan is the percentage of the property value that a bank or financial institution can lend to a property buyer. Lenders examine the LTV ratio before approving a home loan to ensure that they do not lend an amount that is higher than the property’s actual price.

Detailed explanation-2: -The loan-to-value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio. Mortgage lenders may use the LTV in deciding whether to lend to you and to determine if they will require private mortgage insurance.

Detailed explanation-3: -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.

Detailed explanation-4: -What is a ‘good’ loan-to-value ratio? As a general rule of thumb, your ideal loan-to-value ratio should be somewhere under 80%. Anything above 80% is considered a high LTV. There are plenty of mortgages available for people with LTVs at 80%, 90%, or even 95%, but you’ll be paying much more on interest.

Detailed explanation-5: -For loans above Rs 75 lakhs, the required LTV ratio is 75%. What is LTV ratio? LTV ratio is the portion of the property value that a bank can finance. This ratio is used by banks and housing finance companies to lower default risk.