What is LVR or the Loan to Value Ratio

LVR is a term commonly mentioned in the media. It stands for Loan to Value Ratio.


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So, that’s the amount that a lender will advance based on the value of a property. For example, if a home’s worth a million dollars, a lender lends you $500,000. They’ve lent 50% of the value, so the LVR is 50%. Typically the banks have been lending up to 95% and enabling clients to purchase a property with a 5% deposit. That obviously is a riskier proposition for a bank. So they do assess those clients very carefully to ensure they have good job stability and a good credit rating, and there’s nothing in there that would give them any concerns in terms of their risk.

As the market changes with things such as COVID-19 or the global financial crisis, when there’s uncertainty, traditionally, the banks will pull those LVRs back a bit. And the Reserve Bank also has some control over what ratios the bank is lending to, as in the past they have restricted the loans for property investors to try and cool the market down. So loan to value ratio is simply the amount of loan against the value of a property.

Note: If you’ve read my Offerings page, you’ll have read from my experience, we’ve been able to secure loans as high as 80% of the current market value of your property. Conversely though, where you’re applying for vacant land or commercial property, then you’ll often get a lower percentage lending ratio. If you’re still unsure about your own loan to value ratio circumstances, it’s always best to just have a no-obligation chat with me as every scenario does have its unique characteristics.