The loan against property (LAP) is one of the most applied secured loan options available in India. It can give you a considerable amount at a lower interest rate. It means that you can pay reduced EMIs and deal with your monthly expenses better.
The loan that is given against the value of your property is calculated using a formula. It is called the Loan to Value (LTV).
Based on the LTV value of the property to be mortgaged, you can know how much loan amount you can get.
You can use the Loan to Value Calculator on any leading lender’s website to know an amount that you can borrow.
Read on and know the concept of the Loan to Value Calculator and how to use it!
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What is the Loan to Value Ratio?
The Loan to Value or the LTV is the percentage of the loan money that you can obtain as per the market value of the property to be mortgaged.
Usually, the Loan to Value in the case of the loan against property India facility ranges between 40-75% of your property’s calculated value.
If you want to keep your property as collateral and want to get a large loan amount, then the LTV lets you know the maximum money that you can get.
The mortgaged property’s value is determined by factors like its occupancy and type (residential or commercial).
Once you are aware of the loan value that your mortgaged property can get you, you can use the loan against property EMI Calculator.
It helps you calculate your monthly outgo if you apply for the loan.
To know the LTV value of your ‘to be mortgaged property’, you can use the Loan to Value Calculator available on a lender’s platform free of cost.
How can you use the Loan to Value Calculator?
Using the Loan to Value Calculator to know about the exact loan amount that you can get is simple. Here is what you need to do to calculate the amount easily. Take a look:
- Open the Loan to Value Calculator available on a lender’s website.
- Enter your employment types like Salaried and Self-employed and property type such as Commercial and Residential.
- Choose the exact value of your property that you want to keep as collateral.
- Once you do that, you will come to know about your eligible loan amount.
- Choose the tenure 2 years to 20 years and the loan against property India interest rate.
- Once you choose these elements in the Loan to Value Calculator, then the tool will showcase the exact payable EMI. It will also display the exact interest that will be payable over the tenure and the actual total payment (EMI + Interest).
Does the LTV Differ According to the Type of Property?
Yes, the LTV varies as per the type of property that you want to keep as collateral while applying for the loan against property facility.
The LTV value is higher for the residential property when compared to a commercial property. Averagely, the LTV ratio is at least 10% higher for residential properties than commercial ones.
But certain industrial buildings are also eligible to help you get a higher amount.
What’s more, the Loan to Value of a property is also dependent on the occupancy level of the premises.
If your property is occupied, then it will fetch a larger amount than vacant ones. And it is irrespective of the fact that it is a commercial or residential property.
If you have age on your side, your credit score is high, and your debt to income ratio is less, then you can get a large amount with a longer tenure.
You should try to maintain a debt to income ratio under 50% with a credit score of 750 or more to fetch a significant loan amount.
If you are approaching the loan against property, then you can use the Loan to Value Calculator and be sure of an amount that you can get.