What is loan-to-value ratio in SAP CRM-IFS - Financial Services?

SAP Term: loan-to-value ratio

• Component: CRM-IFS

• Component Name: Financial Services

• Description: A lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage loan. To calculate the loan-to-value ratio, the system uses a BRFplus formula and considers the financial requirement and the value of the property: Loan to Value Ratio = Financial Requirement / Property Value * 100

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• Key Concepts: 
  The loan-to-value ratio (LTV) is a financial term used to describe the ratio of a loan amount to the value of an asset purchased. It is commonly used in the context of mortgages, but can also be applied to other types of loans. In the case of SAP CRM-IFS Financial Services, the LTV is used to calculate the maximum loan amount that can be offered to a customer based on the value of the asset they are purchasing. 
  
  How to use it: 
  In SAP CRM-IFS Financial Services, the LTV is used to determine the maximum loan amount that can be offered to a customer. The LTV is calculated by dividing the loan amount by the value of the asset being purchased. For example, if a customer is purchasing an asset worth $100,000 and they are requesting a loan for $50,000, then their LTV would be 50%. 
  
  Tips & Tricks: 
  When calculating an LTV, it is important to remember that the value of the asset being purchased should be based on its current market value and not its purchase price. This will ensure that the LTV calculation is accurate and that customers are not offered more than they can afford. 
  
  Related Information: 
  The LTV ratio is just one factor that should be taken into consideration when offering loans to customers. Other factors such as credit score, income, and debt-to-income ratio should also be taken into account in order to ensure that customers are able to repay their loans.