What is LVR, and why it is important for investors?

LVR or loan-to-valuation ratio is the proportion of money you borrow (loan) compared to the value of the property. Lenders will examine your LVR before agreeing to give you the money needed to purchase your property as a way to assess your risk as a borrower.

LVR is calculated as a percentage. Lenders use the following formula to determine LVR: divide the value of the property (the purchase price) by the deposit to ascertain the amount of money you need to borrow (the loan value).

What is a good LVR?

An LVR of 80% or lower is the ideal place to be for a borrower. Loans above 80% LVR are considered ‘high risk’ and can incur additional fees such as Lenders Mortgage Insurance (LMI) so that they are protected in case of default.

Be in the know.

Knowing your LVR before shopping around for an investment loan will allow you to make an informed decision.

Need help calculating your LVR? Chat to our friendly team today.