What is your CLTV? And Why does it matter to Lenders?
The amount of cash you can access from your home is dependent on various lender requirements, with one of the most important being your CLTV, which means "combined loan-to-value" ratio.
Your combined loan-to-value ratio, or CLTV, is the total amount mortgage debt you have on your home expressed as a percentage of your home’s fair market value. This includes all mortgages and liens on your property, and "Fair Market Value" means the price a property would sell for under normal buying conditions in an open and competitive market.
How do lenders decide how much I can borrow?
Calculating your CLTV allows lenders to assess the amount of money they are willing to lend to you without risking potential default or home foreclosure. Generally, many lenders are willing to only lend up to 80% of homeowner’s CLTV, leaving a 20% safety “cushion.” The higher the percentage, the more you can borrow.
At Spring EQ, for instance, we offer homeowners loan options that allow them to offer up to 97.5% of their CLTV—and HELOC loans featuring 10 years of interest-only payments.
No matter the lender, this percentage may be influenced by other factors including your credit score, debt-to-income (DTI) ratio and the type of refinance you choose.
Maximizing Your Cash Out
Understanding your CLTV, along with the equity options available to you, will help you maximize your cash out. If you're ready to explore the process of seeing how much cash you can get from your home, just drop us a line.