Finance Basics
What does loan-to-value ratio mean?
LVR compares your loan to the property value. It influences pricing, insurance and which products are available.
Educational information — not personalised financial advice.
The calculation
LVR = loan amount ÷ property value × 100
A $600,000 loan against an $800,000 property is an LVR of 75%.
Why lenders care
LVR is a measure of risk. Lower LVR generally means more product choice and no lenders mortgage insurance. Above 80% LVR, LMI commonly applies.
Valuation, not purchase price
Lenders use their own valuation, which may differ from the purchase price or from an online estimate. For refinancing, the valuation is often the deciding factor in whether a target LVR is achievable.
Next step
Use the LVR Calculator to test different loan and value combinations.
Where this comes from: Written from publicly available Australian lending and government information. Figures change — confirm current details with the relevant lender or government source before relying on them.