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pixie

How Do I Work Out Loan To Value Ratio?

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Oops - I'd forgotten you'd outlined this previously (also, thanks for the info in the previous message - it was very helpful).

I just wondered is there a 'set formula' I can use (in case my deposit increases). I've looked on the web and seen differing equations for how the ltv ratio is worked out (and some of them are producing different results), so I'm a little confused.

Thanks,

pixie

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Oops - I'd forgotten you'd outlined this previously (also, thanks for the info in the previous message - it was very helpful).

I just wondered is there a 'set formula' I can use (in case my deposit increases). I've looked on the web and seen differing equations for how the ltv ratio is worked out (and some of them are producing different results), so I'm a little confused.

Thanks,

pixie

No probs.

LTV = [loan / value] * 100%

As simple as that. The only difficulty is determining the value, as the size of the loan and 100% are reasonably easy to be exact about. Value is conventionally the price paid, but is more open to interpretation.

If you have seen anything which gives a different result, it would be interesting to see a link and work out why it is different.

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Thank you - that's great (I now feel silly for asking the question in the first place). The information I've seen on other websites arrived at their figures using a lengthier process which is why I was getting confused - doh!

pixie

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Thank you - that's great (I now feel silly for asking the question in the first place). The information I've seen on other websites arrived at their figures using a lengthier process which is why I was getting confused - doh!

pixie

Nothing to feel silly about. If other websites tell you something which doesn't make sense, then it is only sensible to check it out. I would be interested to see a link to any different way of calculating LTV

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Nothing to feel silly about. If other websites tell you something which doesn't make sense, then it is only sensible to check it out. I would be interested to see a link to any different way of calculating LTV

Maybe :

(total cost-deposit/total cost) x100

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'Vardy' - I found this (but am not sure which website I found it on):

1. Start with the purchase price of the property as the value for the property. (We'll use the amount $150,000 as an example.)

2. Subtract the amount of your down payment ($20,000 in our example).

3. Identify your loan amount (the purchase price minus the down payment; in this case $130,000.)

4. Divide loan amount (loan) by the purchase price (value). In our example, this would be $130,000 divided by $150,000, which equals 0.87, or 87 percent - your ratio.

5. Use this number with your lender when referring to your loan. You would say that you want a loan with an 87 percent Loan-to-Value or LTV.

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'Vardy' - I found this (but am not sure which website I found it on):

:blink: Vardy? I am not from the family of Vardy, I am from the family of Shadows :lol:

1. Start with the purchase price of the property as the value for the property. (We'll use the amount $150,000 as an example.)

2. Subtract the amount of your down payment ($20,000 in our example).

3. Identify your loan amount (the purchase price minus the down payment; in this case $130,000.)

4. Divide loan amount (loan) by the purchase price (value). In our example, this would be $130,000 divided by $150,000, which equals 0.87, or 87 percent - your ratio.

5. Use this number with your lender when referring to your loan. You would say that you want a loan with an 87 percent Loan-to-Value or LTV.

Effectively:

((total cost-deposit)/total cost) x100

as given by Hip to be bear. Same as I gave, just that this way you work out the loan, as I am sure you can see. But I would agree, it is possible to make a right meal of the job.

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