The Loan to Value Ratio (LVR) is a ratio to calculate the percentage that the loan amount represents, against the value of any security that is being offered by a borrower.
Here is an example of the equation:
The final purchase price of a property and the valuation of
a property, may not necessarily be the same figure.
If this is the case, the lender will use the lower of the
Many lenders will go to a maximum of 95% for owner occupied
properties and 90% for investment properties. However, this depends on the
lender’s products and criteria, which can often change.
Lenders prefer deposits to come from genuine savings.
When LVR is calculated, the ratio is calculated on the total
amount of the loan, which generally includes all fees and charges, against the
value of the property.
In the case of multiple securities, LVR is calculated on the
total value of all of the properties.
In those instances, the calculation is:
Total Loans on
Property/Total Valuation of Property x 100=LVR%
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Thursday, 27 February 2020