Loan to Value: Introduction and Its Importance in Loan Against Property


Everyone needs financial aid at some point in their life or another. In such situation, people either choose to borrow money from their family and friends or head to a bank or financial institution for a loan.

You may need monetary help owing to a variety of reasons, but you can take refuge in the fact that a loan helps you pay for the huge expenses. For instance, an education loan enables you to complete your education and a car loan helps in providing funds to purchase a vehicle. Other than this, people also go in for Personal Loans and a Loan Against Property (LAP).


When you Apply for the Loan Against Property, taking into account Loan to Value is equally essential. Here is all you should know about it.

Loan Against Property

A Loan Against Property is a secured loan. Once you obtain this loan, you are free to do anything with the money received since the lender does not state any specifications on how you have to make use of the loan.

All said and done, however, what exactly is a Loan Against Property? Obtaining a loan (that is when you borrow money) after keeping your commercial or residential property as security or collateral is known as a Loan Against Property. After you keep your property as collateral, the lender assesses the property based on the current market standards. Following this, the lender decides the interest rate and Loan to Value (LTV).

What is Loan to Value (LTV)?

Getting a loan is hard and no matter how much effort you put in, sometimes, you cannot obtain one easily. This is because banks and other lending institutions go through various procedures and processes before signing you up for a loan. When you submit your Loan Against Property documents, you do not get the loan right away. The reason is that the bank will take many elements into consideration. One such factor is Loan to Value.

A Loan to Value is all about how much mortgage you have in relation to how much your property is worth. It is shown as a percentage figure that defines the proportion of your property that is mortgaged and the amount that is yours. If you are new to the world of property loans, a Loan to Value is an essential aspect you need to take into consideration.

Evaluating Your Property

As long as you are the lawful owner of the property, you can take advantage of LAP. You can take a loan against any type of property, be it a piece of land, a house or a commercial premises. If more than one person owns that specific property, it is mandatory that all the legal owners jointly apply for the loan against the co-owned property.

After the bank receives your loan application, it sends an appraiser. The bank-appointed appraiser is a must as it ensures the evaluation of the property occurs in an unbiased and systematic manner. The final figure that the appraiser comes to depends upon the age of the property and its condition on the whole. To ensure that your property is approved promptly, make sure the property is entirely owned by the applicant and is free from any earlier liens.

Loan to Value Ratio

Obtaining the Best Loan Against Property Offers does not mean going to the first bank or lending institution and applying for a loan. It requires research, and you need to compare and contrast the various deals well before going in for the best one. When comparing multiple loans, you need to look into a loan to value ratio. This tells you about the ratio of a loan to the value of an asset purchased.

Comparing different lending institutions ensures you obtain the best loan to value ratio that exists. Most financial institutions offer an LTV of 50-90% depending on the type and age of the property, location, and other eligibility criteria. A great deal of this percentage depends upon how a particular bank or financial institution assesses the property.

Opting for such a loan also has some processing charges that either ranges from 1% to 2% of the loan value. If you check your eligibility in advance, you can bank on a LAP. It is essential to pick the best and most beneficial lender for your Loan Against Property. When you select the right loan from the right lender, you can avail exciting benefits, but you also need to be very careful. This is because if you do not pay your loan on time, you are inviting trouble and risking your future. The most important and alarming one being losing your property.

The bottom line lies in conducting your research well. This ensures you are well informed and can make a knowledgeable decision accordingly.


To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989. 

Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers. 

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