What is Loan To Value Ratio(LVR)

LVR stands for Loan to Value Ratio and is the amount of money you borrow for a home loan compared to the value of the property and expressed as a percentage. Lenders use this calculation to determine the risk factor of the home loan.

You can find this out by dividing the amount you’ll need to borrow to purchase a property by the property’s value.

If you buy a property for $500,000 and need a loan amount of $300,000 to purchase it, your LVR will be 0.60, or 60% when expressed as a percentage.LVRs are important when it comes to getting a mortgage.

Generally, the lower the LVR, the lower the risk you present to your lender. Also, lower LVRs often qualify for cheaper interest rates. Generally, a loan of 80% or less is recommended, as borrowing more leads to more fees and charges and the possibility of higher interest rates.

For more information on myTax 2019, online tax return 2019, myGov 2019, Tax Return 2019 , or any other tax related matter, please call our professional accountant on 1300 768 284 .