LVR stands for Loan-to-Value Ratio. It is one of the most important numbers in property finance and determines how much a lender will let you borrow against a property’s value. Understanding LVR is essential for every Australian property investor in 2026.
How Is LVR Calculated?
LVR is calculated by dividing the loan amount by the property’s value, then multiplying by 100. For example, if you borrow $640,000 to buy an $800,000 property, your LVR is 80%. The remaining 20% ($160,000) is your deposit or equity.
Why Does LVR Matter for Property Investors?
- Below 80% LVR: No Lenders Mortgage Insurance (LMI) required. Most lenders offer standard rates.
- 80% to 90% LVR: LMI applies. This is a significant upfront cost that can reach $15,000 to $30,000 on a $700,000 property.
- Above 90% LVR: Very few lenders will approve. Higher risk tier, higher rates, stricter assessment.
LVR Benchmarks for Australian Property Investors (2026)
| LVR | Deposit Required | LMI? | Risk Tier |
|---|---|---|---|
| 60% | 40% | No | Very low |
| 70% | 30% | No | Low |
| 80% | 20% | No | Standard |
| 90% | 10% | Yes | Medium |
| 95% | 5% | Yes | High |
How Does LVR Affect My Next Property Purchase?
When you refinance an existing property to buy another, your lender will assess the LVR of both the existing loan and the new loan. If your existing property has grown in value and your LVR has dropped to 60% or 65%, you may be able to access that equity as a deposit without selling.
GeeVee Verdict
Target an 80% LVR entry on every investment property. Avoid LMI where possible — it is a cost that adds to your loan balance and earns you nothing. If you need to buy above 80% LVR, make sure the suburb’s growth profile justifies the extra cost within 2 to 3 years.
Frequently Asked Questions
Can I use equity in my home to invest?
Yes. If your home is worth $1,000,000 and your loan balance is $400,000, you have $600,000 in equity. At 80% LVR, you can borrow up to $800,000 against the home, giving you $400,000 in accessible equity to use as a deposit for an investment property.
Does LVR affect my interest rate?
Yes. Most lenders price risk by LVR tier. Borrowers at 60% LVR typically receive better rates than those at 90% LVR. The difference can be 0.2% to 0.5% per annum.
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