What does LVR mean?
1.5min read | 300 word count
If you’re in the market for a new home or an investment property, loan to value ratio, also commonly known as LVR, is a term to become familiar with.
"Loan to value ratio means simply the loan value compared to the value of your property.”
Loan to value ratio means simply the loan value compared to the value of your property. Basically, this looks at the total home loan amount you are borrowing and works out what percentage it represents of the total value of the property that is securing the loan.
For example, you’ve worked hard and saved up a $60,000 deposit to buy a $300,000 home. That $60,000 equals 20% of the total house value, so your bank loan will make up the balance 80% of the purchase value. This means you'll have a loan to value ratio, or LVR, of 80%. If you’re not a numbers person, leave it to us to help.
What does this mean for you? The value of the property and the size of your deposit will affect how much lenders allow you to borrow. A general home loan LVR is about 80%, meaning you’ll need to save a 20% deposit or have that in equity. Some banks and lenders will require you to have lenders mortgage insurance (LMI) if your LVR exceeds a certain ratio, allowing you to purchase the property you want, but incurring extra LMI fees.
We love helping our clients to find the right finance deal to get them into a new home, or to finance an investment property, and we help them to understand the LVR expectations of different banks and lenders.
Whether you’re a first-time buyer, investor or exploring options to refinance, let us find you the right finance deal for your family needs. Consider the advantages of speaking with one of our friendly advisors today and make your big dreams a big reality!