Combined Loan-To-Value Ratio (CLTV) Explained for Australians in 2025

Ever wondered how multiple property loans stack up when you’re borrowing? The Combined Loan-To-Value Ratio (CLTV) is the metric lenders use to get the full picture—especially as 2025 brings fresh regulations and sharper scrutiny to the Australian lending market.

What Is the Combined Loan-To-Value Ratio (CLTV)?

The CLTV ratio measures the total amount you’ve borrowed against a property’s value, but with a twist: it includes all loans secured by the property—not just your primary mortgage. In Australia’s dynamic lending environment, this ratio is a key tool for both lenders and borrowers navigating complex property deals, refinancing, or leveraging equity.

For example, if your home is worth $1 million, and you have a $600,000 mortgage plus a $100,000 line of credit secured against it, your CLTV is ($600,000 + $100,000) ÷ $1,000,000 = 70%.

Why CLTV Matters More in 2025

As property prices stabilise and APRA (Australian Prudential Regulation Authority) maintains close oversight, lenders are recalibrating their risk models. In 2025, most major banks are tightening their maximum CLTV thresholds, typically capping them at 80% for owner-occupiers and often lower for investors. This follows APRA’s 2024 guidance aimed at curbing risky lending and ensuring borrowers don’t overextend as interest rates remain elevated.

• Borrowing Capacity: If your CLTV exceeds 80%, expect stricter scrutiny, higher interest rates, or the need for lenders mortgage insurance (LMI).

• Refinancing and Equity Access: Lenders now evaluate CLTV before approving additional lines of credit or top-ups. A high CLTV could block your ability to unlock home equity.

• Investment Strategies: Property investors using multiple loans across one or more properties must track their combined ratios, as aggregating debt can quickly push them above lender limits.

Recent policy changes mean lenders must account for all debts secured by a property—not just the primary mortgage—when assessing serviceability and risk.

Real-World Scenarios: How CLTV Impacts Australian Borrowers

1. The Upgrader: Sarah wants to renovate her Sydney home and applies for a $150,000 home equity loan. Her existing mortgage is $700,000, and her property is valued at $1.1 million. Her CLTV after the new loan would be ($700,000 + $150,000) ÷ $1,100,000 ≈ 77%. She clears the 80% threshold, but if her property were valued lower or she borrowed more, she’d face tougher lending conditions or LMI costs.

2. The Investor: Daniel owns two properties, each mortgaged and cross-collateralised. When applying for a third investment loan, his bank calculates the CLTV across all his loans against the combined property values. If the ratio sits above 75%, he might be forced to stump up more equity or pay higher rates.

3. The Refinancer: Lisa wants to refinance her home loan and consolidate a personal loan secured against her property. The new lender calculates her CLTV including both debts. If her CLTV is too high, she may have fewer lender options in 2025’s cautious market.

Tips for Managing Your CLTV in 2025

• Track all secured debts: Include redraw facilities, lines of credit, and secondary mortgages when assessing your CLTV.

• Keep CLTV below 80%: This is the magic number for most Australian lenders—staying under it helps you avoid LMI and access better rates.

• Get updated valuations: If your property’s value has increased, your CLTV may be lower than you think, opening up more options.

• Understand lender policies: Each bank may interpret CLTV differently—some include undrawn lines of credit, others don’t. Ask for clarity up front.

The Bottom Line: CLTV Is the New Borrowing Battleground

With 2025’s lending landscape more risk-aware than ever, understanding your Combined Loan-To-Value Ratio is crucial. Whether you’re buying, refinancing, or investing, keeping a close eye on your CLTV could be the difference between approval and rejection—or thousands saved in interest and insurance premiums.