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Lending value is the property value a lender actually uses to calculate the loan-to-value ratio and maximum mortgage amount — generally the lesser of the purchase price and the appraised or assessed value — rather than a figure the borrower or seller may quote.
If an appraisal or automated valuation model comes in below the agreed purchase price, the lender uses that lower figure as lending value, which means the borrower needs to cover the gap with more of their own funds rather than financing it.
On a refinance, lending value is established using a fresh appraisal rather than the original purchase price, since the property may have gained or lost value since it was bought. Because LTV is the mortgage amount divided by lending value, a lower lending value directly reduces how much a lender will advance.
Lesser-of rule: lending value is generally the lesser of the purchase price and the appraised or assessed value of the property.
Confirmed by appraisal or AVM: lenders establish lending value using a full appraisal or, on lower-risk files, an automated valuation model.
Drives the maximum loan amount: since LTV is the mortgage amount divided by lending value, a lower lending value directly reduces how much a lender will advance.
Reassessed at refinance: lending value is recalculated using a current appraisal any time a property is refinanced, not carried forward from the original purchase.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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