Loan-to-Value (LTV) Ratio Formula
The Loan-to-Value ratio is a key metric lenders use to assess risk. A lower LTV means less risk for the lender and often better loan terms for you.
LTV Ratio Formula
LTV = (Loan Amount / Property Value) × 100
Where:
- LTV = Loan-to-Value ratio (%)
- Loan Amount = The amount you're borrowing
- Property Value = Appraised value of the property
Step-by-Step:
- 1
Determine loan amount
This is the total mortgage/loan amount.
- 2
Get property value
Use the appraised or purchase value.
- 3
Divide and multiply by 100
LTV = (Loan / Value) × 100.
Worked Examples:
Home loan
Loan: ₹40,00,000Property: ₹50,00,000
Result: 80% LTV
LTV = (40,00,000 / 50,00,000) × 100 = 80%