What Is a Mortgage Debt Ratio?
The mortgage rate, also known as the "head", is the ratio of the sum of the interest on the principal of the mortgage loan to the value of the mortgaged property. Reasonably determining the mortgage rate is an important part of mortgage loan management. Generally, banks should consider the following factors when determining the mortgage rate: (1) loan risk. The loan risk and mortgage rate change positively. The higher the mortgage rate, the greater the risk, and the lower the mortgage rate, the smaller the risk. Therefore, for high-risk loans, lenders use reduced mortgage rates to reduce risks; smaller risks may have higher mortgage rates. (2) Creditworthiness of the borrower. In general, the mortgage rate should be lower for borrowers with weak asset strength, improper structure, and poor reputation. Conversely, the mortgage rate can be higher. (3) Variety of collateral. Due to the different types of collateral, their possession and disposal risks are also different. According to the principle of risk compensation, the mortgage rate should be lower for those collaterals that have relatively large control risks and disposal risks, otherwise they can be set higher. (4) Loan term. The longer the loan term, the longer the mortgage period, and the greater the risk to the mortgage period. Therefore, the mortgage rate should be lower. The mortgage period is short, the risk is small, and the mortgage rate can be higher.
Mortgage rate
- Its calculation formula is:
- Mortgage rate = sum of loan principal and interest ÷ collateral valuation × 100%
- The mortgage rate of domestic and foreign banks' mortgage loans is generally about 70%, that is,
- 1. Applicability of collateral,
- Generally speaking, the mortgage rate is the ratio of the loan amount to the appraised value of the real estate, also known as the static mortgage rate. Here, the real estate value is assessed based on the external environment at the time of the loan. It is a fixed value and the loan amount is a fixed value. In fact, with changes in the economic environment, the value of real estate also changes, and the balance of mortgage loans changes with the change in the amount of repayment by the lender. Dynamic mortgage rate is the ratio between the current mortgage loan balance and the current mortgage real estate value.
- The dynamic nature of the mortgage rate has led to the dynamics of its ability to protect housing mortgage loans.
- In order to monitor the actual protection of the mortgage rate on housing mortgage loans, it is necessary to calculate the current loan to value ratio (CLTV). The real-time mortgage rate is the mortgage rate at the specific point in time CLTV = OS / (LOV × R) where OS represents the balance of the home mortgage loan; LOV represents the value of the housing market when the mortgage loan is issued; R represents the housing price index / housing mortgage Housing price index at the time of distribution.