What loan-to-value means for a gold loan
Loan-to-value is the loan divided by the value of the gold, shown as a percentage. A loan of 4 lakh rupees against gold worth 6.5 lakh is an LTV of about 61.5%. The lower it is, the more cushion the lender has, and the more the gold price can fall before the lender asks for more security or sells.
Each lender sets a maximum LTV, and it can depend on the size of the loan, so the calculator asks you to enter your lender's limit. Some lenders measure LTV on the loan plus the interest due at the end of a single-payment loan. A choice lets you see it both ways.
The value of the gold comes from its net weight, its purity and the price per gram. Enter the weight of any stones separately, because they are not valued as gold. Gold prices move daily, and the lender uses its own valuation, so the result is an estimate.
Worked example
50 g of 22 carat gold at ₹13,000 a gram is worth ₹6,50,000.00. A loan of ₹4,00,000 against it is an LTV of 61.54%. With a lender limit of 75% the most the gold supports is ₹4,87,500.00, so there is ₹87,500.00 of room left.
The gold price could fall by 17.95% before the loan reached the limit, which is a price of ₹10,666.67 a gram for 22 carat gold.
If the lender counts the interest at 9.9% a year for 6 months as well, the amount due at the end is ₹4,19,800.00 and the LTV measured on it is 64.58%. A loan of ₹5,50,000 against the same gold is an LTV of 84.62%, which is ₹62,500.00 over the 75% limit.
To find the most you can borrow on your gold, use the gold loan amount calculator.
If the LTV is too high
If your LTV is above the lender's limit, you can borrow less, pledge more gold, or pick a lender with a higher limit. If gold prices fall after you borrow, the LTV rises, and some lenders ask for part-repayment or more gold. Ask your lender how it handles that.
Rules for gold loans in India are set by the Reserve Bank of India and by each lender, and they change. The page does not apply a rule for you, which is why the limit is a number you enter.
If you already know the value of your gold, the gold loan limit calculation gives the maximum loan from it.
Inputs for the gold loan LTV calculator
Weight of your gold items
The total weight in grams, including any stones. A troy ounce is 31.1035 g.
Weight of stones and other non-gold parts
Stones, pearls and fittings are not valued as gold. Enter 0 if there are none.
Purity (carat)
The carat stamp on the item. 24 carat is pure gold and 22 carat is common for Indian jewellery.
Gold price is quoted for
Choose 22 or 24 carat to match the price you have, and the calculator converts it.
Gold price per gram
Today's price per gram for that purity. The price shown is only an example, so enter the current price.
Loan amount
The amount you borrow or have been offered against the gold.
Lender's loan-to-value limit
The most the lender lends as a share of the gold's value. Use the figure on your quote.
Loan-to-value is measured on
Choose the loan alone, or the loan plus the interest due at the end, to match how your lender counts it.
Interest rate (a year)
Simple interest for the term. It is only used when interest is counted.
Term
The months until the single payment is due. It is only used when interest is counted.
CALCULATOR QUESTIONS
Gold loan LTV calculator questions
How do I calculate the LTV of a gold loan?
Divide the loan by the value of the gold and multiply by 100. The value is the net weight times purity times the gold price.
What happens if the gold price falls?
The value of your gold falls, so the LTV rises. If it passes the lender's limit, the lender may ask for more gold or part-repayment.
Is interest included in the LTV?
Some lenders count the interest due at the end of a single-payment loan. You can choose either way here.
What is a safe LTV?
Lower is safer. The calculator shows how far the gold price could fall before you reach your lender's limit.