What does LVR mean?
LVR is an acronym for Loan to Value Ratio. This is a term used by lenders to describe the percentage of the property value you are borrowing. It is calculated by dividing the loan amount by the value of the property or the purchase price, whichever is the lesser. For example if your home was worth $1,000,000 and you decided to borrow $500,000 then your loan would have an LVR of 50%. The LVR is used as part of the loan assessment process to determine the risk to the lender and also to determine if your loan will require Lenders Mortgage Insurance (LMI) or not. As a general rule lenders are more flexible with their approval guidelines if your loan has an LVR below 80%.
