Real Estate and Mortgage Institute of Canada Inc.
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What is loan to value (ltv) and how is it calculated?

The loan to value of a mortgage is defined as the amount of the loan, in dollars as a percentage of the value of the property, in dollars. 

This is calculated by dividing the mortgage loan amount by the value of the property.


If a borrower wished to purchase a property for $400,000 and he or she had $50,000 as a down payment, the loan to value would be calculated using the following formula:LOAN TO VALUE

Mortgage Amount / Property Value

To obtain the mortgage amount, the amount of the down payment must first be subtracted from the purchase price. 

Purchase Price – Down Payment = Required Mortgage Amount

$400,000 – $50,000 = $350,000

The mortgage amount is then divided by the property value (which is, in this case, the purchase price)

$350,000 / $400,000 = 0.875 or 87.5% loan to value

Bill C-37, enacted in 2007 by the federal government, contains legislation that changed the definition of conventional and high ratio mortgages in Canada.  By amending section 418, subsection 1 of the Bank Act, the federal government changed what constitutes a high ratio mortgage in Canada from 75% loan to value to 80% loan to value. 

Mortgage brokering in Ontario is regulated by the Financial Services Commission of Ontario (FSCO) and requires a license.  To obtain a license you must first pass an accredited course.  The Real Estate and Mortgage Institute of Canada Inc. (REMIC) is accredited by FSCO to provide the course.  For more information please visit us at or call us at 877-447-3642.

The following is the text of the amendment:

418. (1) A bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.

Joe White
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Joe White

President at REMIC
Joseph J. White has been involved in the mortgage industry since 1988. He began his career as a mortgage agent, and in the mortgage lending sector of the industry he has held positions as National Sales Manager and VP of Sales with two national mortgage lenders.

In the industry’s mortgage brokering sector he is a licensed mortgage broker and has been a partner at a successful mortgage brokerage, manager at two national brokerages, principal broker at a commercial brokerage, founder of a mortgage investment corporation, and is owner and principal broker of his own boutique brokerage.

As an educator, Mr. White has been educating the mortgage industry since 1996.During his 14 years at Seneca College he was a professor and program coordinator and is currently President of the Real Estate and Mortgage Institute of Canada Inc. (REMIC).Mr. White has developed several courses for Seneca College, including the first mortgage broker education program in Ontario,as well as the mortgage agent course.He has written two textbooks used in the mortgage industry and by over 20 Ontario colleges with over twenty thousand copies in print, in addition to several business focused books and e-books. He has instructed over fifteen thousand students and in 2003 won the Excellence Award for teaching and leadership excellence at Seneca College.He can be contacted at
Joe White
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