What is LVR (loan-to-value ratio)?
Loan-to-value ratio (LVR): is your loan amount divided by the lender's valuation of the property, expressed as a percentage. Borrow $480,000 against a $600,000 home and your LVR is 80%. It's the single number that most shapes your interest rate, LMI bill and approval odds.
Part of the Everstone mortgage glossary · Reviewed June 2026
How lenders use your LVR
Lenders price risk in LVR tiers. The same borrower at the same bank will commonly be offered a sharper rate at 60% LVR than at 70%, at 70% than at 80%, and above 80% two things happen at once: pricing steps up again and Lenders Mortgage Insurance enters the picture.
Note the fine print: it's the lender's valuation, not your purchase price. If you pay $620,000 for a property the valuer puts at $600,000, the bank lends against $600,000 and your deposit has to cover the gap. On refinances the same logic works in your favour — if your home has risen in value since purchase, your LVR may have fallen into a cheaper tier without you repaying a cent extra.
Moving your LVR in the right direction
- At purchase: a larger deposit, negotiating harder on price, or buying below the valuer's view of the market.
- At refinance: different lenders' valuers routinely disagree by 5–10% on the same property. Ordering valuations through more than one lender — something a broker can do upfront — can drop you a whole pricing tier.
- Over time: extra repayments and capital growth compound; an annual LVR check is one of the simplest rate-saving habits there is.
Rule of thumb: 80% LVR is the line where LMI starts; 60% is where the sharpest advertised rates live. Knowing which side of a tier boundary you sit on is worth real money.
Common questions about LVR
What's a good LVR?
At or below 80% avoids LMI and unlocks decent pricing; at or below 60% you're in most lenders' best tier. Above 90% expect LMI, tighter policy and fewer lenders to choose from.
Can my LVR change after settlement?
Yes — every repayment lowers it and every valuation movement shifts it. That's why refinancing after a few years of growth often lands a better tier.
Is LVR calculated differently for investment loans?
The formula is identical, but many lenders cap investment lending at lower maximum LVRs and price investment tiers slightly higher.
Related terms: LMI · Offset accounts · Full glossary
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