LVR (loan to value ratio)
LVR is the loan amount divided by the lender's valuation of the property, expressed as a percentage; an $800,000 loan on a $1,000,000 valuation is an 80% LVR.
LVR, explained.
Lenders price and approve loans by LVR because it measures their exposure if the property had to be sold. Below 80% most lenders treat a loan as standard. Above 80% the borrower usually pays lenders mortgage insurance, and above 90% or 95% the pool of willing lenders shrinks quickly.
The valuation, not the purchase price, sets the denominator. If a valuer comes in below the contract price, the LVR rises and the shortfall has to come from the buyer. That is why a finance review checks the likely valuation range before a contract is signed, not after.
Tools that use this term.
Longer reads from the archive.
When the reading raises a question, ask it.
A finance review starts with a conversation and a written position from Dayan Kasturiratna, who provides the credit assistance on every file. No credit check to start.
The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
