At Fullerton India, we work to ensure that each and every customer is satisfied with the offer they receive, and is the best value they can get for their individual profiles. We provide loan against property with an LTV of up to 60-70% of the value of the property. 

What is Loan to Value or LTV?

A loan is taken by people when in need of funds. To obtain a loan is easy when you have property or assets to place as collateral security with the lender. The amount granted as the loan is not the entire value of the property but a certain percentage of its value, which is determined based on factors such as the type of property, the age of the property, your monthly income, current financial obligations, and other parameters including the organization’s policy at the time of loan application. This ratio or percentage of the amount of loan that would be forwarded against the appraised value of the property is known as the Loan to Value Ratio or LTV.  

What is the LTV Calculation Formula?

Depending on the lender’s policy, the maximum LTV for a particular applicant is determined. This LTV is then multiplied with the current appraised value of the property to determine the maximum loan amount that can be offered against it.

Thus, if the lender’s LTV ratio calculator has set the LTV for 70%, and the value of the property is INR 1 crores, then as per the LTV calculation formula

Max. loan amount = LTV * Appraised value of the property

Thus, for the above example, the maximum amount that can be borrowed against the property is INR 70 lakhs.

Factors That Affect LTV Calculation:

Certain factors affect the LTV ratio and vary from person to person. LTV is higher or lower based on:

  1. Residential property vs Commercial Property: The LTV ratio is on a general basis higher for commercial properties versus residential properties.
  2. Occupied Properties vs Vacant properties: Occupied properties have higher LTV ratios than vacant properties. Self-occupied properties have still higher LTR than rented out properties. This is for residential as well as commercial properties.
  3. Age of the Property: Newer properties tend to get a higher LTV when compared to older ones.
  4. Location: If the property is located at a prime location, then the chances of a higher LTV are more.

NOTE: The eligibility criteria of the applicant in terms of employment history, income, current monthly income credit score, etc. are also taken into account while determining the maximum loan that can be given. However, the LTV is determined purely based on the above factors, as well as the lender’s policy.

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