Finance Broker Australia

Loan to value ratio, often referred to as LVR, is an important calculation to keep in perspective when purchasing property with finance.

The easiest way to calculate loan to value ratio is to divide the loan amount by the actual property purchase price or valuation (whichever is the lower - purchase price or valuation).

An $80,000 loan ÷ $100,000 purchase price/valuation = 0.80

Multiply this 0.80 x 100 to convert to a percentage and the loan to value ratio = 80% LVR

With most banks and lenders this is a loan that would not require mortgage insurance to be paid by the home loan applicant from a full documentation application in most areas. 80 percent LVR is also commonly the maximum most main stream lenders will lend to a low documentation or low doc home loan applicant.