This calculator helps you understand your Loan-to-Value (LTV) ratio for purchasing or refinancing a home in Canada. The LTV ratio is important to understand as it impacts the amount that you are able to borrow, in addition to potential mortgage defualt insurance.
What is Loan-to-Value (LTV)?
The loan-to-value ratio compares your loan amount as a percentage of the property’s value. This is a crutial ratio that lenders use to assess the risk associated with a mortgage. A loan-to-value ratio above 80% would be considered a high-ratio mortgage which would require mortgage default insurance. These insurance premiums are based on the loan-to-value ratio. You can see how these are calculated with our mortgage default insurance calculator.
What is the formula for calculating loan-to-value?
You can calculate your loan-to-value with the following inputs:
- Property value
- Loan amount
Loan-to-value (LTV) Ratio = (Loan Amount / Property Value) X 100
What is a low-ratio mortgage?
A low-ratio mortgage or conventional mortgage is where the loan-to-value is 80% or less. This means that a total down payment of 20% or more has been laid down on the property price. While a larger down payment allows you to avoid CMHC mortgage default insurnace, purchasing insurance may provide you with access to a more favourable rate.