Loan to value ratio

Loan-To-Value Ratio (also known as LTV ratio) is calculated as:

LTV ratio is used by financial institutions (lenders). For example, if you want to buy a $100,000 house and you are putting $5000 (5%) in the down payment. That means the remaining $95,000 (95%) is your balance and that 95% is also the LTV ratio.

Why do you have to know about LTV ratio

When you are refinancing your mortgage or getting a home equity line of credit, that is when you want to know about the LTV ratio. Because in Canada, you always have to keep 20% of your equity that means the banks cannot lend you for more than 80% LTV.

For example, your $100,000 house can be refinanced for up to $80,000 (80%) only. has developed a refinance calculator that does the work for you, it is absolutely free to use.