What is the Full Form of LTV – Guidelines and Formula
LTV Full Form
The full form of LTV is Loan to value ratio. It is a financial ratio that compares the loan amount to the asset being financed. This ratio is significant for lenders because it assists them in determining the risk of lending money to a borrower. A higher LTV ratio indicates a higher risk to the lender, which may necessitate a higher interest rate or the use of mortgage insurance.
RBI Guidelines on LTV
The Reserve Bank of India has established guidelines for all lenders that govern loan disbursement policy.
| Home Loan Sanction Amount | LTV Ratio |
| Up to Rs.30 Lakh | Cannot exceed 90% |
| Between Rs.30 Lakh to Rs.75 Lakh | Cannot exceed 80% |
| Above Rs.75 Lakh | Cannot exceed 75% |
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Formula to Calculate LT
Lenders compute the LTV ratio using the following formula:
- LTV Ratio (%) = Amount Borrowed/Property Value X 100
Final Word
LTV (Loan to Value) is an important ratio used by lenders to assess the risk of a loan. It compares the amount of a loan to the appraised value or purchase price of the asset being financed.As a borrower, having a lower LTV ratio can improve your chances of getting approved for a loan with a favorable interest rate, which can be achieved by making a larger down payment or negotiating a lower purchase price.
Anyway, you can always apply for a Navi cash loan that requires minimal documents and gives you instant disbursal.
