What is your LVR?
The Loan to Valuation Ratio (LVR) of your loan is the percentage of the property value that you’re borrowing.
Lenders use the LVR to assess your home loan application, as it indicates the likelihood that they will lose money in the event that you can’t repay your loan.
An LVR of 100% is a very high risk, whereas an LVR of 80% is considered as safe by most lenders. The majority of lenders will require you to pay Lenders Mortgage Insurance (LMI) if you borrow over 80% LVR.
Looking for ways to borrow at a high LVR?
Check out 5 Ways To Borrow At A High LVR to do just that!
Example of how to calculate LVR
If you borrow $900,000 against a property valued at $1,000,000 then your mortgage will have a 90% LVR.
This would be considered high risk LVR by the lender, so they would require Lenders Mortgage Insurance for your loan.
How does my LVR affect my loan?
The policy used by the lender will change depending on the LVR of your loan.
If you’re borrowing 80% LVR or less then the lender may make exceptions to their normal lending policy. This is considered to be a low LVR home loan.
However, if you’re borrowing above 80% LVR, you’ll find that lenders are less willing to make exceptions, ask for more documents and assess your loan in a conservative way. This is considered to be a high LVR mortgage.
You can read the pages below for more information on applying for a high LVR home loan:
You can learn more on our LVR page.