The mortgage industry is a vast world with its own language. One of the many abbreviations used is ‘LVR,’ which stands for ‘Loan to Value Ratios.’ This is what it means.
When determining how much you can borrow to buy a home, how much of a deposit you need to save, and whether you qualify for a specific mortgage product, the LVR is one of the most important factors to consider. The LVR is the percentage of the property’s value as assessed by the lender that your loan equates to. So, if the property you want to buy is worth $500,000 and you need to borrow $400,000 to buy it, the loan is 80% of the property value, resulting in an LVR of 80%.
LVR is significant because different lenders and loan types have varying maximum LVRs, and some lenders will only lend up to a certain LVR for small properties, properties in specific areas or for low documentation loans. Most lenders will finance 80% LVR or higher with Lenders Mortgage Insurance (LMI).
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