How to calculate your Loan to Value (LTV) Ratio | Real estate and car loan

LTV or Loan to value is a number that indicates the ratio of a person's eligibility for a loan. LTV also will determine how much charge of a loan, fee that accompanies the process of borrowing and other costs associated with the loan. Value of LTV will also determine whether you will have to pay insurance toward mortgage or not.

To calculate your LTV ratio, first you must determine whether you will take out loans to buy real estate properties, to buy a new car, to buy a truck, to establish a new business or to purchase other items that make you have to submit a loan. After you specify one, then you can proceed by performing the following steps:
- Loans for the purchase of real estate property -
Step 1
Find information about the market value of the property you want to buy. You can get the market value of the property by contacting the seller on the same area for similar properties, check the market value via the internet in real estate website or you can determine market value by looking for information about this on the daily newspaper that has a column about the market value of property.

Step 2
The next step is to determine the value of the property. In general, loan company or institution will be advised appraisers for you. You can pick one appraiser of several recommended by the loan company to get the property appraised. Appraiser will assess the property based on current market conditions and based on the impact of market conditions in the future or during the term of the loan. In some cases, you will get the same value between the approximate value of the loan company and a professional person before determining how much actual value.

Step 3
Lower value of the appraised or market will be used for the purpose of calculating your LTV ratio. And lenders will assess objectively at your income, existing liabilities, current assets, your expenses and your repayment capacity then they will determine the maximum loan amount appropriate for you based on whether you are an employed or in business. Most of the value of the loan you will receive is usually equal to or less than the approved value and will be balanced with your ability to pay in the present and in the future.

The formula to get the LTV ratio is:

LTV ratio = loan amount approved from lenders / lower of the market or appraised value

If the results of your ratio is 1, then you will get a loan 100% of property value. And if your LTV ratio is 0.5, then you will get a loan of 50% of the property value and the remaining 50% will be a nominal of your down payment you have to pay.

- Loans to buy a car (Car loan)-
The first thing you should do is determine what kind of car you want to buy. If the car company and the lender is different, then you should get a quote from the car company about the value of car you want to buy and then submit the quote together with the details of your income to the lender.

The formula to get the LTV ratio is:

LTV ratio = approved loan value / value of the car

This formula also can use for other types of vehicles such as trucks, cabs etc..


- Loans for the purchase of other items -
To calculate your LTV ratio in order to purchase other items you can do by following the steps described above....