What is the typical loan-to-value ratio for private mortgages.

February 7, 2026 | Posted by: Alex Vinarski

Understanding Loan-to-Value (LTV) Ratios for Private Mortgages in Canada

If you’re considering a private mortgage, the most important term you’ll need to understand is the Loan-to-Value (LTV) ratio. 

Private lenders are less concerned with income verification and more concerned with the ability to recover their capital if a default occurs, making the LTV ratio their most critical metric.

What is the Typical LTV for a Private Mortgage?

In Canada, typical LTV ratios for private mortgages generally range between 65% and 80%, with 75% being a common target in stable urban markets. This means if your home is appraised at $1,000,000, you could typically secure a private mortgage between $650,000 and $800,000.

Key Factors That Determine Your LTV

Several critical factors influence the exact LTV a private lender will offer you:

  1. Type of Mortgage:

    • First Mortgages: Typically qualify for the highest LTV, often up to 75%-80%.

    • Second Mortgages: Since the lender is in a secondary position, LTVs are usually lower, commonly in the 65%-75% range for the combined total of all mortgages on the property. This ensures the lender's security if the property must be sold.

  2. Location and type of the Property:

    • Major Urban Markets (Vancouver, Toronto): Properties in high-demand, liquid markets can often secure the highest LTVs (up to 75-80%) because they are easier to sell if necessary. Condo market is pretty slow right now, and most lenders will lend only up to 65% on condos. In some cases they would do combination of first and second mortgage to go up to 75%. 

    • Rural or Niche Markets: For properties that are harder to sell quickly, lenders are more conservative. LTVs here are often capped at 50%-65% to mitigate the risk of a slow or difficult sale.

  3. Perceived Risk & Your Interest Rate:

    • A lower LTV (e.g., 50%-60%) represents less risk for the lender, which can often secure you a better interest rate.

    • A higher LTV (e.g., 75%+) comes with higher risk for the lender, which is reflected in a higher interest rate for the borrower.

The Bottom Line for Borrowers

When seeking a private mortgage, your property’s equity is your greatest asset. To position yourself for the best possible terms:

  1. Know Your Equity: Get a realistic idea of your property's current market value. Government property assessment not always reflect market value. 

  2. Understand Your Needs: Determine how much capital you actually require. Borrowing at a lower LTV can significantly reduce your interest cost.

  3. Consider the Trade-Off: Would you prefer to access more capital (higher LTV) at a higher cost, or borrow less (lower LTV) for a better rate?

More information on private mortgages here: https://www.ipotekacanada.com/index.php/private-mortgages

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