What does a home loan LVR tell you?
The loan-to-value ratio, commonly referred to as LVR in Australia, compares the amount borrowed against the value of the property used as security. It is expressed as a percentage:
LVR = secured loan amount ÷ lender-accepted property value × 100
For example, a proposed mortgage of $610,000 on a property valued at $875,000 results in an LVR of approximately 69.71%.
MoneySmart defines LVR as the amount borrowed as a percentage of the value of the asset securing the loan. See its loan-to-value ratio definition.
Why this calculator shows more than one LVR
A basic LVR calculation uses one loan balance and one property value. However, many homeowners have more than one debt secured by the same property. Looking only at the main mortgage can understate the total secured exposure.
The current main-mortgage LVR uses only the first mortgage. The total secured-debt calculation adds other secured loans and the amount currently drawn from a secured line of credit.
The full-limit scenario replaces the drawn amount with the total secured credit limit. This provides a conservative view of what the ratio would be if the facility were fully used. It does not imply that every Australian lender calculates LVR this way. Actual treatment depends on the facility and lender policy.
Below the selected target
A lower ratio means more of the property value is represented by equity rather than debt. This may influence available loan products, pricing and LMI requirements, but it does not guarantee approval.
Near 80% LVR
Eighty per cent is a widely used Australian planning point. It is not a universal lending limit or a promise that LMI will never apply.
Above 80% LVR
Lenders mortgage insurance is often required for higher-LVR lending. Premiums and eligibility depend on the lender, insurer, property, loan amount and borrower circumstances.
Investment or equity release
Maximum ratios and evidence requirements can differ for investment loans, cash-out refinancing and other forms of equity release. Use a target suited to the particular purpose being considered.
How lender valuation affects the result
LVR depends on the property value accepted by the lender, not simply the figure entered by the borrower. A lender may use an automated valuation, a desktop assessment or a physical valuation. For a purchase, it may also consider the contract price when determining the value used for lending.
If the accepted value is lower than expected while the proposed loan stays the same, the LVR rises. This can increase the required deposit, reduce borrowing room or affect the available interest rate and loan products.
The sensitivity table demonstrates this relationship across several hypothetical property values. It is not a forecast of the property market or an estimate of the value a lender will accept.
What the 80% comparison means
Multiplying the property value by 80% gives the amount of secured debt that would mathematically produce an 80% LVR. For a property valued at $875,000:
$875,000 × 80% = $700,000
If current secured balances total $510,000, the difference is $190,000. This is a mathematical gap to the selected ratio—not confirmation that another $190,000 can be borrowed.
Additional borrowing remains subject to serviceability, acceptable loan purpose, credit history, product limits, valuation and lender policies. Fees or an LMI premium added to the loan may also raise the final ratio.
LVR and lenders mortgage insurance
MoneySmart explains that a borrower may need to pay lenders mortgage insurance when borrowing more than 80% of a property’s value. LMI protects the lender if the borrower defaults and a property sale does not cover the outstanding debt. It does not insure the borrower against repayment difficulties.
Some lenders, professions and Australian Government guarantee schemes may allow eligible borrowers to obtain a higher-LVR loan without paying a conventional LMI premium. Conditions, property limits and eligibility requirements apply.
Read MoneySmart’s current information about deposits, LVR and lenders mortgage insurance .
This calculator provides only an LMI indicator. It does not calculate a premium because there is no single rate that applies to every lender, borrower and property.
Using LVR when buying, refinancing or accessing equity
For a straightforward purchase where the lender accepts the purchase price as the property value, the deposit percentage and LVR will normally total 100% before transaction costs. Transfer duty, conveyancing and other purchase expenses do not form part of the property deposit unless a lender expressly agrees to finance them.
When refinancing, include the amount required to repay the existing mortgage along with any approved cash out and costs added to the replacement loan. MoneySmart recommends checking discharge charges, application fees, break costs and the new loan term before switching. See its switching home loans guide.
For an existing homeowner, gross equity is the property value minus outstanding secured balances. The portion that might be available for further borrowing is normally smaller because the new total debt must remain within the lender’s accepted LVR and pass its other assessments.
Use the Australian home deposit calculator to examine purchase cash requirements. For additional borrowing and projected equity, use the Australian home equity calculator .
Australian LVR questions
My property is worth $800,000 and I owe $560,000. What is my LVR
Divide $560,000 by $800,000 and multiply by 100. The resulting LVR is 70%, assuming $800,000 is the value accepted by the lender.
Is an 80% LVR automatically approved without LMI
No. Eighty per cent is a common reference point, but lender and insurer rules vary. Approval also depends on serviceability, credit history, loan purpose, the property and the selected product.
Why did my LVR increase after the lender’s valuation
A lower property valuation makes the loan a larger percentage of the property value. The debt may be unchanged, but dividing it by a smaller accepted value produces a higher LVR.
Should a second mortgage be included in my calculation
Yes, when you want to understand the total debt secured against the property. Add the balances of the relevant secured loans and compare that total with the accepted property value.
Does an unused line of credit always count towards LVR
Not necessarily. Treatment varies by lender and facility. This calculator shows both the drawn-balance result and a conservative scenario in which the full secured limit is treated as potential exposure.
Can I refinance when my LVR is above 80%
It may be possible, but fewer products may be available and LMI or stricter conditions may apply. Switching costs and any LMI already paid on the existing loan should also be considered.
Does a lower LVR mean I can definitely borrow more
No. A lower LVR can provide a larger equity buffer, but it does not demonstrate that additional repayments are affordable. The lender will conduct a separate borrowing capacity and credit assessment.