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What Is LVR (Loan-to-Value Ratio)?

LVR stands for ‘loan to value ratio’, and it’s a comparison between how much you’re borrowing and how much the property you’re purchasing is worth. Lenders use it to determine risk when assessing loan applications.

How is it calculated?

LVR is calculated by dividing the loan amount, by the purchase price or valuation of the property, and multiplying it by 100.

For example, a $240,000 loan to buy a property valued at $300,000 would have an 80% LVR (240,000 divided by 300,000 multiplied by 100).

LVR is important to lenders because the lower the LVR is, the lower the risk.

When does it apply?

It’s used to calculate risk associated with different types of home loans including:

  • Standard home loan – LVR is calculated by subtracting your deposit from the purchase price and dividing the remainder by the property value.
  • Refinancing – the lender uses their own valuation of the property to calculate LVR as the property price you originally paid may no longer be relevant.
  • Off-the-plan – As the value may change by the time it’s built, the lender uses either the purchase price or valuation to calculate LVR, whichever is lower.
  • Favourable purchase (between family members) – In these cases, the lender also uses the lower value of either the purchase price or valuation to calculate LVR.

For units or apartments that are considered high density, LMI may apply if the LVR is more than 70%.

If you still have any questions or need a little more information, you can contact us at Tiimely Home to assess your individual needs.

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Important information about rates
*Tiimely Own products are subject to loan-to-value ratio (LVR) requirements, eligibility and credit criteria and terms and conditions. Rates apply to new Tiimely Home customers only and are subject to change without notice.

**The rates shown for products available from panel lenders via Tiimely Home brokers are current based on information from panel lenders and are subject to change without notice. The home loan with the lowest current interest rate is not necessarily the most suitable for your circumstances, you may not qualify for that particular product and the product may not include all the features relevant to you. All applications are subject to lender assessment and approval, and eligibility requirements and terms and conditions apply.

^Comparison rates are based on a loan amount of $150,000 over a 25-year term. They factor in fees associated with applying for the loan, ongoing fees and fees associated with leaving the loan. Tiimely Own fixed loans roll to a variable principal and interest rate at the end of the specified fixed term. If the interest only period is not specified, the comparison rate is calculated on a 5-year period.

WARNING: The comparison rates are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Other important information
+Tiimely Home is known for its fast approvals for Tiimely Own products and responsive service, powered by our technology and supported by our team of experts. Application and approval times are estimates only and not guaranteed. Turnaround times are dependent on individual circumstances. Applications for a Tiimely Own loan may require an assessor to obtain more information. Assessment times for home loan applications made via Tiimely Home brokers are dependent on individual panel lenders.

The information provided does not constitute an offer of credit and does not take into account your objectives, financial situation or individual circumstances. We recommend seeking independent financial, taxation and legal advice to check how the information provided aligns with your individual circumstances.

Tiimely Home receives commissions from Tiimely Own loans and, where customers apply for a loan with the assistance of a Tiimely Home broker, from loans settled with panel lenders. Tiimely Home brokers do not receive individual commissions. More information about the credit services provided by Tiimely Home is available in the Tiimely Home Credit Guide (PDF) and Tiimely Home Broker Credit Guide (PDF).