Best Mortgage Rates In Canada

Loan-to-Value(LTV) ratio indicates the proportion of all the loans secured against your property to your property’s market value. It is a critical element in mortgage rate pricing because it represents the amount that could be recovered in the event of default, especially if the loan goes into foreclosure.

In a purchase transaction, the LTV compares the ratio of your down payment to the property’s purchase price.

In a mortgage refinance transaction, the LTV compares the value of the requested new loan amount to the property’s appraised value.

Generally, the lower the LTV, the lower the default risk; the higher the LTV, the higher the default risk.
Lower LTV can help you demand a low mortgage rate since you are considered less risky given that you have high equity in the property. Your low LTV translates to a standard mortgage loan amount, meaning the lender risks less since you have invested more in the property.

On the other hand, the higher the LTV, the lower your ability to demand a low mortgage rate, given the high default risk.