You can use this calculator to work out what the Loan to Value Ratio (LVR) will be for your mortgage. In other countries such as the US this is known simply as Loan To Value.
So what is your LVR?
The %LVR is a percentage that indicates the amount of money you are borrowing relative to the purchase price or value of the property. For example if you borrow $900,000 for a $1,000,000 property value, your loan will have a 90% LVR.
LVR is used in the assessment of your mortgage application. In the event you cannot repay your home the banks want to know the likelihood that they will lose money, so they use the LVR.
An LVR of 80% is considered safe by the majority of lenders. An LVR of 100% however is considered very high risk and most people are not eligible for a loan to value ratio this high.
Our Calculator
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What does this mean for you?
The policy a bank or lender tailors to you will change depending on the loans LVR. Borrowing below 80% means that lenders are far more willing to offer exceptions to their normal lending policies such as waiving fees and even lower interest rates. They are far more conservative above 80% LVR.
Another factor related to LVR is Lenders Mortgage Insurance (LMI). LMI applies if you are borrowing over 80% of the property value as the probability rises that the banks will lose money if you cannot make your repayments.
Use our Lenders Mortgage Insurance calculator for a guide to how much your LMI will be.
Enquire online today!
This calculator is only to be used as a guide. If you are ready to apply for a loan you can contact us for more specific information regarding your loan to value ratio. Enquire online today to talk to one of our specialist mortgage brokers.
