A loan-to-value (LTV) calculator is a tool that helps you determine the LTV ratio of a loan. To use an LTV calculator, you'll need to provide the appraised value of the asset or property and the loan amount. The calculator will then use these figures to calculate the LTV ratio.
Here's an example of how to use an LTV calculator:
- Determine the appraised value of the asset or property. Let's say the appraised value of a property is $500,000.
- Determine the loan amount. Let's say you're taking out a mortgage of $400,000 to purchase the property.
- Use an LTV calculator to calculate the LTV ratio. You can find LTV calculators online or use a spreadsheet program like Microsoft Excel. Simply enter the appraised value and loan amount into the calculator and divide the loan amount by the appraised value. In this example, the LTV ratio would be 80% ($400,000 ÷ $500,000).
An LTV calculator can be a useful tool when applying for a loan, as it helps you determine the amount of equity you have in the property and can help you determine the amount of down payment you need to make to meet the lender's requirements. It can also help you understand the potential costs associated with the loan, such as private mortgage insurance (PMI) if the LTV ratio exceeds a certain threshold.
