InvestorQ : What is loan to value (LTV) ratio? What is its relevance in a loan against property (LAP)?
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What is loan to value (LTV) ratio? What is its relevance in a loan against property (LAP)?

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Nitin Shah answered.
3 years ago
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Loan to value (LTV) ratio is a financial term used by lenders to express the ratio of a loan that can be provided to the value of the asset.

This term is commonly used by lenders- banks and non-banking finance companies (NBFCs) to represent the ratio of the loan as a percentage of the total appraised value of real property. In simpler terms, this ratio determines the extent to which banks can finance loan against property (LAP).

Depending on the location and the type of the property, the lender’s LTV varies:

1. Residential property - 65- 70%

2. Commercial property - 55- 65%

3. Industrial property - 40-55%

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