Loan-to-Value Ratio (LVR) is one of the most important factors lenders consider when assessing a home loan application. It represents the percentage of the property’s value that you are borrowing. For example: if you buy a $600,000 property with a $60,000 deposit, your LVR is 90%. The lower your LVR, the stronger your application.
Why does it matter? A lower LVR means less risk for the lender. This can lead to better interest rates, fewer restrictions, and in many cases, you can avoid paying Lenders Mortgage Insurance (LMI). Keeping your LVR below 80% typically gives you the best borrowing position.
Even if you can’t start at a low LVR, you can still reduce it over time by making extra repayments or allowing the property to grow in value. Once your LVR improves, refinancing may unlock lower rates or better features.
Understanding LVR helps you plan realistically—whether you are buying your first home, upgrading, or investing. A mortgage broker can calculate your LVR, assess your deposit options, and guide you toward the most competitive loan structure.
