LoansFinancial Glossary
LTV Ratio (Loan-to-Value)
Definition
The ratio of the loan amount to the appraised value of the asset being purchased, expressed as a percentage. For home loans in India, RBI caps LTV at 75-90% depending on the loan amount. An LTV of 80% on a Rs 1 crore property means the bank lends Rs 80 lakh and you provide Rs 20 lakh as down payment.
Why It Matters
A higher LTV means a smaller down payment but a larger loan with more total interest. For home loans above Rs 75 lakh, the LTV cap is 75%, meaning you need at least 25% down payment plus 7-10% for stamp duty and registration. This total upfront cost is often 30-35% of the property value — a significant sum to plan for.