1 min read.Updated: 29 Jun 2021, 03:17 PM ISTLivemint
Higher LTV also helps in increasing the budget of the borrower. Millennials prefer this as it allows them to buy houses of their choice with comparatively modest savings
NEW DELHI: Loan-to-value (LTV) is the biggest determinant for millennials while deciding a lender for buying their first home, a survey by NoBroker, a peer-to-peer real estate platform found.
LTV refers to the ratio of loan amount and value of the property. Higher the LTV, higher is the percentage of loan amount. This means a lower percentage of down-payment is required to shell out by the buyer. Higher LTV also helps in increasing the budget of the borrower. Millennials prefer this as it allows them to buy houses of their choice with comparatively modest savings.
Some private banks and NBFCs offer more than 80% LTV to reduce the burden of down payment. Banks have also launched hybrid products where home loans are supplemented with personal loans to help home buyers make the down payment. The LTV is decided as per RBI guidelines rather than on-sale consideration.
Amit Agarwal, CEO and co-founder of NoBroker.com said, “The average age of buying a property has reduced and more and more millennials are buying their first homes. They prefer an LTV on the higher side as it enhances the overall ticket size of the purchase. This is the reason that higher LTV has emerged as the most important factor for millennials in terms of choosing the home loan providers, apart from the interest rates. Even if the loan tenure is for 15-20 or even 30 years, most people end up paying off much sooner than the tenure."
As per the survey, millennials preferred a loan tenure of 10-15 years as they want a lower EMI to income ratio.
“A home loan tenure of 10-15 years is the most preferred by 31% respondents, followed by 24% respondents preferring tenure of more than 10 years. About 65% of these millennials are in IT services while the rest are either self-employed or in government services," said the survey.