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What is Loan to Value exactly??

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  • 29-05-2015 4:41pm
    #1
    pico24
    Registered Users Posts: 21 ✭


    I recently inquired about changing my variable mortgage rate as I thought my LTV was <50%
    The bank have said that LTV is calculated on how much the house is worth now compared to when I bought it. That ratio would be greater than 50%
    However I thought LTV meant Loan to Value??
    I had paid a large deposit down initially so my loan at the time of draw down was ~76% but now with recent house price increases my loan is sub 50%
    Can any one tell me is this true??

    Much appreciated


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    #2
    MarkR
    Moderators, Regional Midwest Moderators Posts: 11,101 Mod ✭✭✭✭MarkR


    The Loan would be the current value you would have to pay today to clear it. The value part is the current market value of the house I believe.


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    #3
    pico24
    Registered Users Posts: 21 ✭pico24


    MarkR wrote: »
    The Loan would be the current value you would have to pay today to clear it. The value part is the current market value of the house I believe.

    thats what i thought


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    #4
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    I'm not sure that house price inflation will be rewarded by the bank reducing your interest rate on an existing mortgage. When you think about it, the market goes crazy and house prices start climbing as per the years leading up to the boom, so the banks reduce your interest rate because your LTV starts falling. Guess what? You now have more disposable income so maybe it's time to upgrade to a bigger house.......

    Kaboom! Another crash.


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    #5
    pico24
    Registered Users Posts: 21 ✭pico24


    coylemj wrote: »
    I'm not sure that house price inflation will be rewarded by the bank reducing your interest rate on an existing mortgage. When you think about it, the market goes crazy and house prices start climbing as per the years leading up to the boom, so the banks reduce your interest rate because your LTV starts falling. Guess what? You now have more disposable income so maybe it's time to upgrade to a bigger house.......

    Kaboom! Another crash.

    i am not looking to be rewarded, i am looking to change to their offered rate for LTV <50% (0.3% less, new business is not indicated)
    it also does not differenciate whether LTV is <50% because of house price inflation or if i had paid a lump sum off the loan to bring it to <50% LTV
    Either way its still double european rate,
    also should be no issue moving to a bigger house once you meet their lending criteria and they approve you, thats up to them not me - same as before the crash


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    #6
    homer911
    Registered Users Posts: 5,119 ✭✭✭homer911


    If anyone gets a rate reduction due to a reduced LTV, the best advice is to keep paying the same amount and pay off the mortgage quicker..


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    #7
    bilbot79
    Registered Users Posts: 2,011 ✭✭✭bilbot79


    I don't think you can get a lower rate just because you have paid off more of your loan. The LTV at outset determines the rate but you don't then move into better rates. If you switch provider however....


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    #8
    Victor
    Registered Users Posts: 78,404 ✭✭✭✭Victor


    bilbot79 wrote: »
    I don't think you can get a lower rate just because you have paid off more of your loan.
    Yes you can. When my sister's mortgage dropped below 50%, their rate was cut by 0.5%.


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    #9
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    That is 100% correct. If your property is valued at 200k and mortgage outstanding is 100k then the loan to value is 50%.

    Bank of Ireland reduced fixed loan to value rates last week and existing customers will qualify for these rates however I know that they will look for an updated valuation report on the property which will cost the customer approx. €150.

    MarkR wrote: »
    The Loan would be the current value you would have to pay today to clear it. The value part is the current market value of the house I believe.


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