All Categories ​>​ ​Frequently asked questions ​ > ​ ​Saving for a home loan ​>​ What does LVR mean?

What does LVR mean?

LVR stands for Loan to Value Ratio. It is a comparison of how much you’re borrowing against how much the property is worth.

Lenders use it to determine risk when assessing loan applications - the lower the LVR is, the lower the risk is to the lender.

Here is a quick summary of what you need to know about LVR.

How is it calculated?

LVR is calculated by dividing the loan amount by the purchase price or valuation of the property and multiplying it by 100. For example, a $240,000 loan to buy a property valued at $300,000 would have an 80% LVR (240,000 divided by 300,000 multiplied by 100).

What types of loans does it apply to?

LVR is used by lenders to calculate risk on all sorts of different types of home loans including:

  • Standard home loan – LVR is calculated by subtracting your deposit from the purchase price and dividing the remainder by the property value.
  • Refinancing – the lender uses their own valuation of the property to calculate LVR because the price you paid for the property may no longer be relevant.
  • Favourable purchase (between family members) – the lender will assess the LVR based on the actual valuation of the property.

If you need more information about LVR, contact us at 1300 992 700 or email to assess your individual needs.

Was this information helpful?

Powered by HelpDocs (opens in a new tab)

Powered by HelpDocs (opens in a new tab)