LVR, or loan-to-value ratio, is the size of your loan as a percentage of your property’s value. Borrow $640,000 against an $800,000 home and your LVR is 80%. It is the single number that most shapes what your loan costs.
Why 80% is the magic line
At or below 80% LVR, lenders consider the loan low-risk: no lenders mortgage insurance, and access to their sharpest pricing tiers. Above 80%, LMI applies (unless waived) and rates step up. Many lenders price in bands: under 60%, 60 to 70%, 70 to 80%, and each step down buys a small discount.
LVR moves with valuation, not just debt
Your LVR falls two ways: repaying the loan, or the property rising in value. That second one matters at refinance time. A loan that started at 90% LVR may sit at 75% three years later, unlocking better pricing and an exit from LMI territory. It also works in reverse: a soft valuation can push a refinance above 80% and complicate it.
Where LVR shows up in your loan life
- Buying: sets your deposit requirement and whether LMI applies.
- Refinancing: under 80% means clean switching; the bank’s valuation decides it.
- Equity release: usable equity is the gap between your loan and 80% of value. Work yours out with the equity calculator.
- Rate reviews: if your LVR band has improved, you have a repricing argument. See getting a lower rate.
Property growth quietly improves LVR every year. Nathan checks your current band and whether it unlocks cheaper pricing.
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