Calculate your LTV ratio and see how lenders will view your secured loan application.
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⚠️ Estimates only. Not financial advice. Consult a licensed professional.
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The Loan-to-Value (LTV) ratio measures how much of an asset's purchase price or appraised value is being financed by a loan. It is one of the first calculations any secured lender performs and directly determines your approval probability, the interest rate you receive, and whether additional insurance or guarantors are required.
LTV = (Loan Amount ÷ Property/Asset Value) × 100
Example 1: ₹40L loan on ₹50L property = 80% LTV (you own 20%)
Example 2: ₹90K loan on ₹1.1L scooter on-road price = 81.8% LTV
Example 3: ₹2.1L gold loan on ₹2.8L gold value = 75% LTV (RBI maximum)
The Reserve Bank of India has established maximum LTV limits for home loans to protect both borrowers and the banking system from excessive leverage. These limits apply to all regulated banks and NBFCs:
Loan amount up to ₹30 lakhs: Maximum 90% LTV. You need a minimum 10% down payment.
Loan amount ₹30–75 lakhs: Maximum 80% LTV. Minimum 20% down payment required.
Loan amount above ₹75 lakhs: Maximum 75% LTV. Minimum 25% down payment required.
Gold loans: Maximum 75% LTV — this is a firm RBI cap, not a guideline.
Most lenders use risk-based pricing — borrowers with lower LTV (more equity, less risk) receive lower rates. The premium for high-LTV borrowing is real and significant. On a ₹60 lakh home loan at 90% LTV vs 75% LTV from the same bank, the rate difference can be 0.25–0.5%. Over 20 years at 0.5% difference: approximately ₹4 lakhs saved in total interest by having a lower LTV at origination.
Residential property (home loan): 75–90% depending on loan amount (RBI regulated).
Commercial property (LAP): 50–65% — commercial property is harder to liquidate, so lenders take more conservative positions.
Gold: Maximum 75% (RBI mandate), recalculated daily based on market price.
Vehicles (new): 80–90% of on-road price for new vehicles from approved manufacturers.
Vehicles (used): 70–80% of independently assessed fair market value.
Securities: 50–70% depending on equity/debt fund classification.
As you repay your loan, your outstanding balance falls. As your property appreciates (for real estate), its value rises. Both effects improve your LTV — reducing lender risk. Revisiting your LTV after 3–5 years of repayment and property appreciation can yield meaningful benefits: approach your lender for a rate renegotiation based on your improved LTV position. Banks frequently grant 0.1–0.25% rate improvement to retain good customers who demonstrate improved LTV.
LTV norms vary significantly across countries and reflect local property market stability and regulatory philosophy. USA (Conventional): 80% maximum without PMI (Private Mortgage Insurance). UK: 95% LTV available for first-time buyers under Help to Buy schemes. Australia: 80% standard; above 80% requires Lenders Mortgage Insurance (LMI). Singapore: 75% maximum LTV for first property loan. The variation reflects each country's assessment of property market depth and liquidation risk.
Being 'underwater' on a loan means owing more than the asset is worth — negative equity. This happens when property values fall after purchase (common in cyclical markets) or when you take a very high LTV loan on a depreciating asset like a used car. In India, residential property values rarely fall dramatically (though they plateau for years), but vehicle values drop 15–20% annually. A new car purchased at 90% LTV in month 1 may have negative equity by month 6 simply from depreciation outpacing principal repayment.