What is Loan to Value Ratio (LVR)?
In short, its the value of your loan verses property. Lets take a look at how this looks…
Calculating the LVR is simple, in the example above we have a property worth $200,000 and have borrowed $160,000 (having contributed a $40,000 deposit). To work out the LVR simply divide the Loan Amount by the Property Valuation. Taking the example above the calculation looks like:
- LVR = $160,000 ÷ $200,000
- LVR = 80%
LVR is important because it represents the risk associated to the bank / lender. It will determine whether you will need to pay lenders mortgage insurance and what discounts you qualify for.
Call us on 1300 088 065 for your complimentary review to see how the loan to value ratio affects you.