How LTV Ratio Determine Home Loan Eligibility?

The loan-to-value (LTV) ratio is a ‘financial term’ used by lenders to express the ratio of a loan to the value of an asset purchased. It is a number that describes the size of a loan compared to the value of the property securing the loan. While taking a loan, this value plays an important role as it determines one’s eligibility for loan approval.

LTV ratio home loan

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The loan to value (LTV) ratio is calculated by dividing the loan amount by the total value of the asset securing the loan. It is usually expressed in percentage terms. A higher LTV ratio means more risk because the assets behind the loan are less likely to pay off the loan as the LTV ratio increases.

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How to Get a Home Loan with Poor Credit Score

It is not the end of the world, if you have a poor credit score. You can still procure a home loan. Financing a home loan on a poor credit rating can get tricky if you don’t connect with the right mortgage lender, who has a vast experience of closing subprime loans. Earlier anybody, almost anybody could get a loan sanctioned, but things have changed now. People with low credit qualify for a home loan with higher rates and terms.

How to Get a Home Loan with Poor Credit Score

Your credit score decides two major aspects—

1] Loan Program- Whether conventional or non-conventional.

2] Pricing- Interest rate and any additional charges indicative of the credit score. [Read more…]