If you’re planning to buy a home, you’ve probably come across the term LTV, or Loan-to-Value ratio. But what exactly does it mean—and how can it affect your home loan approval?
At Shivafinz, we believe in empowering home buyers with the right financial knowledge so you make informed decisions from day one.
📌 What is LTV (Loan-to-Value) in Home Loans?
LTV (Loan-to-Value) is the ratio of the loan amount sanctioned by the bank to the total value of the property you’re purchasing.
✅ Formula:
LTV (%) = (Loan Amount / Property Value) × 100
💡 Why is LTV Important?
The LTV ratio determines how much of your property’s cost the bank will finance, and how much you need to pay upfront as a down payment.
🔍 RBI Guidelines on Home Loan LTV:
| Property Value | Maximum LTV Allowed |
|---|---|
| Up to ₹30 lakh | Up to 90% |
| ₹30 lakh–₹75 lakh | Up to 80% |
| Above ₹75 lakh | Up to 75% |
📈 How to Get Higher LTV?
Banks may increase your eligible LTV if you meet certain conditions:
- ✔️ High CIBIL Score (750+ is ideal)
- ✔️ Strong Income & Employment Proof
- ✔️ Good Banking & Credit History
- ✔️ Property in a Tier 1 city or approved locality
👉 However, the higher the LTV, the lower the down payment, but it might also mean higher EMIs and longer repayment tenure.
🏦 Example of LTV Calculation:
Let’s say the value of the property is ₹50 lakh.
- If the bank offers 80% LTV, you will get a loan of ₹40 lakh.
- You’ll have to pay ₹10 lakh as a down payment.
👨🏫 Shivafinz Tip:
📉 If you want a lower EMI or better interest rates, consider reducing your LTV by increasing your down payment.
This shows the bank you’re financially stable—and can even help you negotiate a better loan deal!
🔍 Final Thoughts
Understanding your LTV ratio before applying for a home loan helps you plan your budget, loan eligibility, and financial risk better.
At Shivafinz, we simplify finance. Whether it’s home loan approval, top-up loans, balance transfers, or improving your CIBIL score—we’re here to guide you.
📲 Connect with Shivafinz today for a free loan consultation and start your homeownership journey the smart way!