What it means
LTV = loan amount ÷ value of security × 100
The lower the LTV, the bigger the borrower’s own stake (the margin) and the safer the loan. RBI caps LTV for some loans. For housing loans by banks the long-standing caps are 90% up to ₹30 lakh, 80% from ₹30 lakh to ₹75 lakh, and 75% above ₹75 lakh. Gold loans have their own caps under RBI’s directions, which change over time, so check the current direction before you lend.
Example
A Mysuru family buys a flat valued at ₹50,00,000 and asks for ₹40,00,000.
| Item | Value |
|---|---|
| Requested loan | ₹40,00,000 |
| LTV | 80% |
| Cap for a ₹30–75 lakh housing loan | 80% |
| Result | Allowed, at the limit |
If the valuer puts the flat at ₹47,00,000, the same loan becomes 85% LTV and must come down to ₹37,60,000.
Common mistakes
- Using the sale agreement price when the valuer’s figure is lower.
- Not re-checking LTV when gold prices fall on a gold loan book.
- Including stamp duty and registration in the property value.
In MyRecords
The loan application’s Ratios & bureau tab shows LTV from the loan asked for and the security value (or the proposed pledges’ value), next to FOIR and the bureau details. It shows green up to 75%, amber just above and red beyond; the appraiser records the decision before sanction.