{"id":49535,"date":"2025-06-07T14:06:38","date_gmt":"2025-06-07T08:36:38","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=49535"},"modified":"2025-06-10T10:44:47","modified_gmt":"2025-06-10T05:14:47","slug":"loan-to-value-ltv-ratio","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/loan-to-value-ltv-ratio\/","title":{"rendered":"Loan-to-Value (LTV) Ratio"},"content":{"rendered":"<h2>Loan-to-Value (LTV) Ratio Latest News<\/h2>\n<p>Providing relief to small borrowers, the Reserve Bank of India (RBI) recently increased the loan-to-value (LTV) ratio for gold-backed loans up to \u20b95 lakh.<\/p>\n<h2>About Loan-to-Value (LTV) Ratio<\/h2>\n<ul>\n<li>LTV Ratio represents the\u00a0<strong>proportion of an asset\u2019s value<\/strong>\u00a0that a\u00a0<strong>lender is willing to provide debt financing against<\/strong>, usually\u00a0<strong>expressed as a percentage<\/strong>.<\/li>\n<li>LTV is calculated by dividing the loan amount by the property&#8217;s appraised value or purchase price, whichever is lower.\u00a0<\/li>\n<li><strong>LTV Ratio = (Loan Amount\/Appraised Property Value) x 100<\/strong><\/li>\n<li>For example, if you are planning to purchase a property that is priced at \u20b91 crore and the bank&#8217;s LTV is 70%, you will be eligible for a loan amount of \u20b970 lakh.<\/li>\n<li>LTVs tend to be\u00a0<strong>higher for assets<\/strong>\u00a0that are<strong>\u00a0considered more \u201cdesirable\u201d as collateral.<\/strong><\/li>\n<li>The\u00a0<strong>desirability\u00a0<\/strong>of an asset as collateral is generally\u00a0<strong>measured by how stable its value is<\/strong>,\u00a0<strong>how active its secondary market<\/strong>\u00a0is, and\u00a0<strong>how easily the title can be transferred<\/strong>\u00a0to other parties (among other things).<\/li>\n<li>Typically,\u00a0<strong>loan assessments with high LTV ratios<\/strong>\u00a0are\u00a0<strong>considered higher-risk loans.\u00a0<\/strong>Therefore, if the loan is approved, it\u00a0<strong>has a higher interest rate.<\/strong><\/li>\n<\/ul>\n<h2>Recent RBI Changes to Loan-to-Value (LTV) Ratio for Gold-Backed Loans<\/h2>\n<ul>\n<li>RBI has\u00a0<strong>increased\u00a0<\/strong>the\u00a0<strong>LTV ratio from 75% to 85% for gold loans of up to Rs 2.5 lakh<\/strong>\u00a0per borrower,\u00a0<strong>including interest.<\/strong><\/li>\n<li>In simple terms, if the pledged gold is worth Rs 1 lakh, borrowers can now get up to Rs 85,000 instead of the earlier Rs 75,000.<\/li>\n<li><strong>For gold loans more than Rs 2.5 lakh and up to Rs 5 lakh<\/strong>, the<strong>\u00a0LTV ratio\u00a0<\/strong>has been set at\u00a0<strong>80 percent.\u00a0<\/strong><\/li>\n<li><strong>For loans more than Rs 5 lakh,<\/strong>\u00a0the central bank has set an\u00a0<strong>LTV of 75 percent<\/strong>.<\/li>\n<\/ul>\n<h2>Loan-to-Value (LTV) Ratio FAQs<\/h2>\n<p><strong>Q1:<\/strong>\u00a0What does the Loan-to-Value (LTV) ratio primarily measure?<\/p>\n<p><strong>Ans:<\/strong>\u00a0The proportion of the asset value financed through a loan.<\/p>\n<p><strong>Q2:<\/strong>\u00a0Why are higher LTV ratios generally considered riskier for lenders?<\/p>\n<p><strong>Ans:<\/strong>\u00a0Because they indicate less collateral buffer if the borrower defaults.<\/p>\n<p><strong>Q3:<\/strong>\u00a0How is the LTV ratio calculated?<\/p>\n<p><strong>Ans:<\/strong>\u00a0(Loan Amount \u00f7 Property Value or Purchase Price, whichever is lower) \u00d7 100<\/p>\n<p><strong>Source<\/strong>:\u00a0<a href=\"https:\/\/www.business-standard.com\/finance\/news\/gold-loan-ltv-raised-to-85-percent-up-to-rs-2-5-lakh-rbi-125060601173_1.html\" target=\"_blank\" rel=\"nofollow noopener\">BS<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Loan-to-Value (LTV) Ratio represents the proportion of an asset\u2019s value that a lender is willing to provide debt financing against, usually expressed as a percentage.<\/p>\n","protected":false},"author":8,"featured_media":49497,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[741,21,22,23],"class_list":{"0":"post-49535","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-loan-to-value-ltv-ratio","9":"tag-prelims-pointers","10":"tag-upsc-current-affairs","11":"tag-upsc-prelims-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/49535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=49535"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/49535\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/49497"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=49535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=49535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=49535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}