Is a Loan-to-Value Calculator suitable for refinancing mortgages?

Yes, a Loan-to-Value (LTV) Calculator is a useful tool when considering refinancing your mortgage. The calculator helps determine the proportion of the loan amount relative to the current market value of your property. This ratio is crucial for Indian lenders when assessing refinancing applications. Here’s how it plays a role:

• Determining Eligibility: In India, most banks and financial institutions have specific LTV ratio requirements for home loan refinancing (also known as balance transfer or loan takeover). A lower LTV ratio, typically below 80%, indicates lower risk for the lender, improving your chances of getting the refinance loan approved at better interest rates.
• Interest Rates Impact: Indian lenders often offer better interest rates to borrowers with a lower LTV ratio. For instance, if your LTV is below 70%, you may be offered more competitive interest rates. A higher LTV ratio (closer to 85% or 90%) may result in higher rates, as the lender considers the loan riskier.
• Accessing Equity: If your LTV is low (indicating you’ve built substantial equity in your property), some Indian lenders may allow you to opt for a top-up loan during the refinancing process. This is useful if you need additional funds for purposes like home renovation or education.