Loan-to-Value Calculation and Product Proposal
The system uses BRFplus to calculate the loan-to-value (LTV) ratio and to propose eligible products during the account origination process.
The LTV ratio is a lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage loan. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan would cost the borrower more to borrow or they will need to purchase mortgage insurance.
To use this function, you must activate the business function CRM-FS, Guided Loan Origination Process
(CRM_FS_NBRNWL_1
).
Features
Banking Opportunity
The LTV and the proposed products are calculated from the Need Analysis
step in the banking opportunity. For more information, see Opportunity with Transaction Type OPBA (Banking Opportunity).
To calculate the LTV ratio, the system uses a BRFplus formula and considers the loan amount and the value of the property.
To determine eligible products, the system uses BRFplus rule sets and considers the following parameters:
Age of the business partner
Customer segment
Loan amount
Contract start date
Term
LTV
Organizational unit and distribution channel
Location of the property
Banking Customer Quote
You can edit the term, term unit, and loan amount in a banking customer quote. After these are edited in the selected variant, the system checks whether the determined product is still valid for the specified conditions. The system uses the same rules and parameters (BRFplus rulesets) as in the product proposal decision table in the banking opportunity.
If no products are determined for the entered criteria, the rule returns a message that the condition was violated (for example “Term should be between 12-45 years”).
Activities
If required, you can change the delivered rules or create your own rules. For more information see BRFplus for Account Origination.