Calculate LTV and CLTV ratio with our free Loan to value calculator. Check the difference between the mortgage and total purchase price of the property.
About Our Loan to Value Calculator
The loan to value calculator on DupliChecker.com is an advanced tool designed for both mortgagee and mortgagor to assess the risk involved with any sort of mortgage. Anyone who wants to calculate loan to value ratio can easily get access to this LTV calculator without installing any application on their device. It’s a web-based utility that just requires a stable internet connection on any kind of device.
Our LTV calculator doesn’t have compatibility issues, and it works the same on all operating systems. There are no charges associated with the usage of our loan to value calculator. The borrowers can use this tool to estimate the rate of interest they will be charged by the lenders based on their LTV. On the other hand, lenders can calculate LTV with this tool to shortlist the mortgage applicants who they can afford to mortgage.
How to Calculate LTV With Our LTV Calculator?
Our online LTV calculator is easy to use and doesn’t create any hurdles for its users. Whether you want to use this loan value calculator one time or multiple times, you won’t face any kind of restriction. All you need to do for calculating LTV with this LTV calculator is follow the simple set of instructions given below.
- First of all, you need to enter the amount of mortgage and the property’s appraised value in the boxes given on this tool.
- The next step is to click on the Calculate LTV button.
- That’s it! Our LTV Calculator will display results in a matter of seconds.
Calculate Loan to Value Ratio (LTV) Manually
The manual process of calculating LTV is strenuous; or at least, it’s not as straightforward as using our online LTV calculator. You can calculate manually with the LTV formula given below.
Formula for LTV calculation = Mortgage Amount/Appraised Property Value
Why Does your LTV Matter?
The LTV becomes a deciding factor when it comes to making a decision on approving or disapproving a mortgage application; hence, it matters a lot. The LTV ratio of the mortgages is directly related to the interest rate that will be charged on it. Your LTV decides how much interest rate a lender will charge to lend you the amount for the property. If the LTV ratio is high, then you’ll have to pay a higher interest rate and vice versa.
Moreover, your LTV ratio also decides whether the lender will ask you to get mortgage insurance or not. If your LTV is high, then a lender will need some sort of security, and that comes with insurance to offset the risk of lending. In this case, your expense on the mortgage will get double as the insurance expense will also come up with high interest.
Difference Between LTV and CLTV
LTV and CLTV are both used for the same reason, i.e., to assess the risk involved with a mortgage. LTV just considers the current mortgage value for risk evaluation. Whereas, CLTV or combined loan to value ratio undertakes all the mortgages previously taken by the applicant to figure out his ability to afford another mortgage. The difference in LTV and CLTV arises during their calculation process, as the former just takes the current amount into consideration while the latter takes all of the amounts. CLTV is mostly used by financial institutes when a mortgagee has taken loans previously.
What is LTV?
The loan to value ratio or LTV is a commonly used ratio by lenders and financial institutes to estimate the risk involved with a mortgage before approving it. The role of LTV is to assess whether the risk to lend any specific mortgage is high or low. It plays a significant role while deciding on the rate of interest that would be charged against the mortgage amount by a mortgage. In addition, the applicants with high LTV might also have to purchase private mortgage insurance (PMI) to reduce the risk on the lender.
What to Do if your Loan to Value Ratio is too High?
You can work on several things if your loan to value ratio is too high. Mostly, the lenders don’t accept the applications with a too high LTV. If they do, mortgage insurance is their requirement which isn’t a good factor for the borrower.
The first thing that you can do is make a bigger down payment. The bigger down payments can be made by taking assistance from family or friends, and it will result in reducing the LTV ratio. In this way, you can get your mortgage approved by the lender at a lower interest rate. In case you cannot make bigger down payments, try looking for another property that will reduce the borrowing amount from the lender. It will also result in your favor and reduce the LTV.