LVR is one of those terms brokers use constantly and borrowers rarely have explained to them properly — but it shapes more of your loan than almost any other single figure.
What LVR actually measures
Loan-to-Value Ratio compares the size of your loan to the value of the property, expressed as a percentage. A $560,000 loan on a $700,000 property is an LVR of 80% — the remaining 20% is your deposit or existing equity.
Why the 80% threshold comes up so often
Many lenders treat 80% LVR as a threshold: borrow above it and Lenders Mortgage Insurance typically applies, adding a cost that's usually added to the loan. Below 80%, more lenders and products tend to become available, though this isn't a fixed rule across every lender.
LVR changes as your property value and loan balance change
As you pay down your loan and if property values rise, your LVR improves over time, which can open up refinancing options or the ability to remove Lenders Mortgage Insurance on some loans. It's one of the things worth reviewing periodically, not just at settlement.
Chris Brown
Managing Director & Finance Broker at New Vision Financial Services, a credit representative under Australian Credit Licence 384704 and a member of the FBAA and AFCA. More about Chris →
Frequently asked
What LVR do I need to avoid Lenders Mortgage Insurance?
Generally 80% or below, though this varies by lender and loan type. Some lenders offer LMI waivers for certain professions at higher LVRs — worth asking about if it applies to you.
How is property value determined for LVR purposes?
Lenders typically use their own valuation, which may differ from the purchase price or your own estimate. This is why the LVR you expect and the LVR a lender calculates can sometimes differ.
Does LVR affect the rate I'm offered?
It can — many lenders price risk differently across LVR bands, though we don't quote specific rates here. Your broker can explain how LVR affects your options for a specific lender and product.