How to Use the LVR Calculator

Enter the property’s value and the total amount of debt secured against the property.

The calculator determines:

• Your current Loan-to-Value Ratio;
• Your estimated property equity;
• Your equity percentage;
• The maximum loan at an 80% LVR;
• Your position above or below an 80% LVR;
• The loan amount allowed at a target LVR; and
• The approximate loan reduction or property value increase needed to reach that target.

What Is LVR?

LVR stands for Loan-to-Value Ratio. It compares the amount borrowed against a property with the property’s value.

LVR Calculation Example

Why Is LVR Important in Australia?

LVR is one of the measures lenders can use when assessing the risk of a home loan or investment-property loan.

A lower LVR generally means the borrower has more equity relative to the property value.

A higher LVR generally means the loan represents a larger proportion of the property’s value.

What Does 80% LVR Mean?

An 80% LVR means the loan equals 80% of the property’s value and the borrower has approximately 20% equity before considering transaction costs.

For an $800,000 property:

$800,000 × 80% = $640,000

What Is a 90% LVR?

A 90% LVR means the borrower is financing approximately 90% of the property value and has about 10% equity.

For example:

What Is a 95% LVR?

A 95% LVR means the loan represents approximately 95% of the property value.

The borrower therefore has only about 5% equity before considering transaction costs and other lending requirements.

Does LVR Include Stamp Duty?

No. LVR generally compares the loan amount with the lender’s accepted property value.

Costs such as:

• Stamp duty;
• Legal fees;
• Conveyancing;
• Mortgage registration;
• Building inspections; and
• Other purchase expenses

are separate from the basic LVR calculation.

Purchase Price vs Bank Valuation

The value used by a lender for LVR purposes may not always be identical to the price paid for a property.

For example, if you purchase a property for $800,000 but the lender assesses it at a lower amount, the effective LVR for lending purposes may be higher than a simple purchase-price calculation suggests.

What Is Property Equity?

Property equity is the difference between the property’s value and the amount owing against it.

If a property is worth $800,000 and the mortgage balance is $600,000:

Estimated equity = $200,000

Equity Percentage vs LVR

In a simple one-loan scenario, equity percentage and LVR complement one another.

For example:

• 80% LVR ≈ 20% equity;
• 70% LVR ≈ 30% equity;
• 60% LVR ≈ 40% equity.

How Do I Reduce My LVR?

There are two basic mathematical ways to reduce LVR:

Reduce the loan balance

Making principal repayments lowers the amount of debt relative to the property value.

Increase the property value

If the property’s accepted valuation rises while the loan remains the same, the LVR decreases.

Actual lender valuations can differ from owner estimates or market listings.

How Much Loan Can I Have at 80% LVR?

Multiply the property value by 80%.

For a $1,000,000 property:

$1,000,000 × 80% = $800,000

How Much Loan Can I Have at 90% LVR?

For a $700,000 property:

$700,000 × 90% = $630,000

What Is Lenders Mortgage Insurance?

Lenders Mortgage Insurance, commonly called LMI, is insurance that can protect the lender if a borrower defaults and the lender suffers a loss.

Whether LMI applies depends on the lender, loan structure, borrower profile, property type and other factors.

An LVR above a particular threshold may increase the likelihood that LMI or another risk-related lending requirement applies, but this calculator does not determine LMI eligibility or cost.

Does an LVR Above 80% Always Mean LMI?

No. Lending policies differ.

Some borrowers may receive exemptions or different treatment depending on profession, guarantor arrangements, government schemes, loan type or lender policy.

Use the 80% level as a useful comparison point rather than a guarantee of a particular lending outcome.

Can I Use Equity for Another Property?

Homeowners and property investors sometimes use available equity when financing another property.

However, total equity is not necessarily the same as usable borrowing equity. A lender may limit borrowing to a particular LVR and will also assess serviceability, income, expenses, credit history and lending policy.

For example, if a property is worth $800,000 and the lender allows lending up to 80%:

80% lending limit = $640,000

If the existing loan is $500,000, the simple mathematical difference is:

$640,000 − $500,000 = $140,000

That does not mean a lender will automatically approve a $140,000 equity release.

LVR for Investment Property

The same basic LVR formula applies to investment property:

Lender policies for investment-property loans may differ from owner-occupied loans.

LVR and Refinancing

When refinancing, the new lender may obtain or use a valuation of the property. The new LVR is then based on the relevant loan amount and accepted valuation.

Changes in property value since purchase can therefore affect refinancing options.

What Happens If Property Prices Fall?

If the property value decreases while the loan remains unchanged, LVR increases.

For example:

• Loan = $640,000;
• Original value = $800,000;
• Original LVR = 80%.

If the value falls to $700,000:

$640,000 ÷ $700,000 × 100 ≈ 91.43%

The borrower has not borrowed additional money, but the LVR has increased because the property value fell.

Can LVR Be More Than 100%?

Yes mathematically. If the loan balance exceeds the property’s value, the LVR is above 100%.

For example:

$550,000 loan ÷ $500,000 property value × 100 = 110% LVR

This can be described as negative equity because the debt exceeds the property’s estimated value.

LVR Calculator Assumptions

This calculator assumes:

• The property value entered is appropriate for the calculation;
• The loan balance entered represents total relevant debt secured against the property;
• No transaction costs are added to property value;
• No lender-specific valuation adjustment is applied;
• No LMI premium is automatically capitalised into the loan;
• No guarantor or government scheme is modelled;
• No borrowing-power or serviceability assessment is performed; and
• Results are mathematical estimates rather than lending approval.

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