Consider a case where two separate loans are to be transacted between the same borrower and lender. This is mostly done in case of mortgage or education loans.
By combining two or more loans into one the repayment procedures and policies are simplified and you can make one centralized premium payment every month instead of juggling between various loan repayments.
For example, consider two loans to be borrowed over a home. One will be a construction loan and the other will be used to repay the first loan. The first loan mostly values the 80% of the mortgage of the new home while the second loan can be based on any one of the mortgages available.
Combined Loan to Value Ratio (CLTV)?
When going for combined loans, the value of CLTV has high significance over your repayment policies. This value is used to determine your eligibility to refinance a home loan or borrow a home equity. This value is calculated by combining both loans that you have borrowed and dividing them by the current financial value of the mortgage.
The lower the value of CLTV, the more is your ownership towards your property. This means you are less likely to go bankrupt and you have high possibility of making the repayments sooner.
