• - The Loan-to-Value (LTV) ratio determines how much of a property’s value you can finance with a loan. 
• - A higher LTV means lower upfront costs but may impact on interest rates and loan terms.
• - Use the LTV calculator to plan your loan smartly and step into your dream home with ease!

Understanding home loan LTV ratios: A guide to loan-to-value calculations and tools

Imagine you're prepared to make the move after finding the ideal house and have already pictured every room furnished to your preferences. And now you have to apply for a home loan. While applying for a home loan, one of the most important factors that is taken into consideration is the home loan LTV ratio (Loan-to-Value ratio). Knowing about the home loan-to-value ratio can assist you in ascertaining how much loan amount you can avail against the property value and how it will affect your down payment.

How does this magic number operate, then? And how can you take advantage of it? Let's dissect it!

Let’s understand in detail what is Home Loan LTV Ratio?

The LTV ratio is the percentage of the property's value that a borrower can get as a loan. The more the LTV ratio, the lesser the initial investment, but it can also affect the terms of the loan as well as interest rates.

The formula for LTV Ratio:

LTV Ratio (%) = (loan amount ÷ property value) × 100

Suppose you are buying a property valued at ₹30 lakh and a loan amount of ₹20 lakh is sanctioned. Your home loan LTV ratio would be:

LTV Ratio = (20,00,000 ÷ 30,00,000) × 100 

LTV limits as per RBI guidelines

The Reserve Bank of India (RBI) in India has prescribed maximum LTV limits which are as below:

• - For properties up to ₹30,00,000 – Max LTV can be 90%
• - For properties ranging ₹30,00,000 to ₹75,00,000 – Max LTV can be 80%
• - For properties of ₹75,00,000 – Max LTV can be 75%|
   

How does the LTV ratio impact your loan?

The LTV ratio on your home loan is important in determining:

• - Loan amount  
• - Interest rates
• - Down payment
• - Insurance requirements
   

Utilizing a Loan To Value calculator

To make home buying easier, you can utilize an LTV calculator to calculate the amount of loan you are eligible for. Just enter the property value and the loan amount you wish to avail and obtain an instant LTV calculation.

How to improve your loan terms with LTV assessment?

If you wish to obtain better loan conditions, do this:

• - Raise your down payment: A larger down payment lowers your loan's LTV ratio and improves its terms.
• - Select a property with stable market value: Because they present fewer risks, they are a better choice. 
• - Raise your credit score: Even with a marginally higher LTV ratio, a strong credit history can help you bargain for a lower interest rate.
   

You can increase your chances of getting a hassle-free home loan and raise your LTV ratio by putting these strategies into practice.

Knowing the home loan LTV ratio is very important to make well-informed financial choices. By having the correct information and instruments such as the home loan to value calculator, you can prepare your loan suitably. You may be a first-time homebuyer or an old hand, HDFC Bank makes the home loan process simple and transparent and enables you to enter your new home with confidence.

Use HDFC Bank's loan calculator home today and start on the path of hassle-free home ownership!