What is a loan-to-value-ratio (LVR)?
When you're talking about home loans, a loan-to-value ratio (LVR) is an important term to remember.
LVRs can affect which home loans you are eligible for and what home loan interest rate you pay.
In this guide we'll cover how to calculate LVR, what a good LVR is, and what you may need to do if your LVR is too high.
What does LVR stand for?
LVR stands for loan-to-value ratio.
LVR in home loans refers to the money you borrow (the loan), as a percentage of the property's cost (the value).
LVR example
For example, borrowing $800,000 from the bank to buy a $1,000,000 property means your LVR is 80%, as you’ve been loaned 80% of the property’s value.
LVRs aren’t static, meaning they can shift over time, as you gradually pay off the amount you borrow, or as the value of your property changes.
How is LVR calculated?
LVR is calculated by dividing the loan you borrow by the value of the property you buy.
Check out the steps needed to calculate your LVR and the LVR formula below.
How to calculate your LVR:
- Work out the your property value (V).
- Work out your loan amount (L) by taking the value (V) and subtracting your deposit.
- Divide the loan amount (L) by the property value (V).
- Multiply that number by 100 to see your LVR.
Why is LVR important?
When you go to apply for a home loan, lenders will look at your LVR because it’s one of the key measurements of your home loan serviceability – in other words, whether the bank thinks you can afford the home loan.
This is why saving up for a 20% deposit is looked at as one of the golden rules of the Australian property sphere because if you don’t need to borrow over 20% of the property’s value, you’re essentially already at an LVR below 80%.
What is a good LVR?
The lower the LVR, the better. A 'good' LVR might be considered anything less than 80% because they're less risk for the lender.
Typically, an 80% LVR is safe for the lender.
LVRs above 80% considered higher risk, which means you may have to take out lender's mortgage insurance (LMI), adding an extra cost on top of your home loan.
Some lenders, like Sucasa home loans, worry less about your LVR and charging you LMI, and more about your mortgage serviceability. This may mean you might be able to avoid LMI, even if you have an LVR above 80%.
Sucasa Ultra Low Rate home loan
- 6.30% p.a. (6.58% p.a. comparison rate*)
- Pay no lender’s mortgage insurance (LMI) when borrowing up to 95%
- Free extra repayments and redraw facility
- Only available in metro capital cities
- High discharge fee ($795)
What's hot
What's not
The Sucasa Ultra Low Rate is a low-deposit home loan, with low up-front fees, and even gives you the flexibility to make fee-free extra repayments on your mortgage. It’s a variable rate home loan, charging 6.30% p.a. (6.58% p.a. comparison rate*) interest, which is bang on the average basic variable rate (6.29% p.a.) in our database (out of 111 owner-occupied, principal and interest loans of $400,000, with an LVR of <80%, at 19 February 2024).
Can you still get a home loan with an LVR above 80%?
While <80% LVRs are ideal for lenders, that’s not always achievable for everyone.
Thankfully, there are a variety of low deposit home loans available for those with LVRs above 80%.
Just be aware that the interest rates on offer for those with LVRs above 80% can be a bit higher than for those who borrow less, and vice-versa.
How does LVR affect interest rates?
A lower LVR may help to lower your home loan interest rate.
This means, as you pay more and more off of your home loan, dropping down to new LVR tiers, you can look to refinance to help bring down your repayments.
Or, if you're interested in a home loan with a rate that goes down on it's own, look into Unloan's Variable home loan for refinancers.
Unloan Variable (Owner Occupier, Refinance Only, LVR <80%)
- 5.99% p.a. variable rate (5.90% p.a. comparison rate*)
- Zero upfront or ongoing fees
- Low cost home loan winner - Mozo Experts Choice Awards 2023 & 2024^
- Refinancers only
What's hot
What's not
Unloan’s Variable Home Loan has taken out a low cost home loan award for the second year running in the Mozo Experts Choice Awards^. Built by CommBank, Unloan offers owner-occupiers a super low 5.99% p.a. variable rate (5.90% p.a. comparison rate*) along with a loyalty discount that shaves 1 basis point off your interest every year for up to 30 years. Loan features include free extra repayments and redraw, and there are no pesky fees to pay. Available for refinance loans of up to $10M. Minimum 20% deposit.
Average variable interest rates for LVR tiers 2024
Looking at the average variable interest rates across LVR tiers in the Mozo database, lower LVRs typically result in lower interest rates.
Correct as of 21 February 2024, for a $400,000, owner-occupied home loan, paying principal and interest.
- 60% LVR | 6.76% p.a.
- 70% LVR | 6.79% p.a.
- 80% LVR | 6.84% p.a.
- 90% LVR | 7.11% p.a.
- 90% LVR | 7.36% p.a.
To see what different lenders are offering right now, compare home loans or check out some of the featured deals below.
Compare home loans - last updated 19 March 2024
-
Featured Product
Ultra Low Rate <95% LVR
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.30% p.a. variable6.58% p.a.Only 5% deposit required to apply. Low upfront costs to pay. No LMI Required. Unlimited Redraw and additional repayments. No Application or ongoing fees. No guarantors or equity sharing required.
CompareCompareUltra Low Rate <95% LVR
Only 5% deposit required to apply. Low upfront costs to pay. No LMI Required. Unlimited Redraw and additional repayments. No Application or ongoing fees. No guarantors or equity sharing required.
- interest rate
- 6.30% p.a. variable
- comparison rate
- 6.58% p.a.
- interest rate
- 6.30% p.a. variable
- comparison rate
- 6.58% p.a.
- Upfront fees
- $790
- Ongoing fees
- $0.00
- Discharge Fee
- $795.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 95.00%
- minimum borrowing amount
- $350,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Sucasa Ultra Low Rate <95% LVR
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Straight Up
Obliterate, Owner Occupier, Principal & Interest, <50% LVR
interest rate
comparison rate
Initial monthly repayment6.24% p.a. variable6.24% p.a.Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
CompareCompareStraight Up
Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
- interest rate
- 6.24% p.a. variable
- comparison rate
- 6.24% p.a.
- interest rate
- 6.24% p.a. variable
- comparison rate
- 6.24% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 50.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Athena Straight Up
-
Neat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.16% p.a.Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
CompareCompareNeat Home Loan
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- Upfront fees
- $250
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $80,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Neat Home Loan
-
Mozo experts choice awards won:
- Fixed Rate Home Loan - 2024
- Investor Fixed Home Loan - 2024
Fixed Rate Home Loan
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment5.99% p.a.
fixed 2 years6.24% p.a.Secure a low rate and enjoy the certainty of repayments, with the BCU Fixed Rate Home Loan. Save with no ongoing annual fees. Pay up to $25,000 extra during a fixed period (T&Cs apply). Lock in for up to 5 years.
CompareCompareFixed Rate Home Loan
Secure a low rate and enjoy the certainty of repayments, with the BCU Fixed Rate Home Loan. Save with no ongoing annual fees. Pay up to $25,000 extra during a fixed period (T&Cs apply). Lock in for up to 5 years.
- interest rate
- 6.29% p.a.
fixed 3 years
- comparison rate
- 6.30% p.a.
- interest rate
- 6.29% p.a.
fixed 3 years
- comparison rate
- 6.30% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $395.00
- Extra repayments
- yes, up to $25,000 during fixed period - fee applies
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 95.00%
- minimum borrowing amount
- $20,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the BCU Bank Fixed Rate Home Loan
-
Straight Up
Obliterate, Investor, Principal & Interest, <50% LVR
interest rate
comparison rate
Initial monthly repayment6.34% p.a. variable6.34% p.a.Investors get a low variable rate depending on your deposit with Athena’s Straight Up Investor Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
CompareCompareStraight Up
Investors get a low variable rate depending on your deposit with Athena’s Straight Up Investor Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.
- interest rate
- 6.34% p.a. variable
- comparison rate
- 6.34% p.a.
- interest rate
- 6.34% p.a. variable
- comparison rate
- 6.34% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 50.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Athena Straight Up
-
Mozo experts choice awards won:
- Offset Home Loan - 2024
Home Variable Rate
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment5.95% p.a. variable5.95% p.a.Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
CompareCompareHome Variable Rate
Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
- interest rate
- 5.95% p.a. variable
- comparison rate
- 5.95% p.a.
- interest rate
- 5.95% p.a. variable
- comparison rate
- 5.95% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - up to $30,000
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Up Home Variable Rate
-
Offset Home Loan
Package, Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.15% p.a. variable6.40% p.a.Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
CompareCompareOffset Home Loan
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- Upfront fees
- $350
- Ongoing fees
- $248.00 yearly
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Offset Home Loan
-
OMG Home Loan
Owner Occupier, Principal & Interest, <60% LVR
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable6.00% p.a.BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.
CompareCompareOMG Home Loan
BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 6.00% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 6.00% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $395.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $1,500,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the BCU Bank OMG Home Loan
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, Refinance Only
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Does LVR include stamp duty?
Up-front costs, such as stamp duty and conveyancing, are not included in your total loan. Therefore, these one-off costs do not count when your LVR is calculated.
How can I decrease my LVR?
Your LVR reflects the amount borrowed as a percentage of the value of the property you’re buying, so if you want to lower your LVR, you can do so by saving up a larger deposit, or by looking at cheaper properties.
Alternatively, you can lower your LVR by using a guarantor. Guarantors are usually family members who agree to put up their home as security on your loan. Importantly, a guarantor doesn't have to use their property as collateral for the entire loan - only the portion you need to reduce your LVR to 80% may be required.
How does the bank value my property?
If you’re buying a property, refinancing or accessing the equity in your home, your bank will insist on conducting a property valuation. This is so the bank can be confident that if you’re unable to pay back the loan, they can sell the property and recover the amount owed.
The valuation itself isn’t usually done by the bank. Instead, it’s outsourced to an independent valuer, who might inspect the property in person and produce a report based on the location, size and condition of the building.
Others might rely on less time-consuming methods to appraise your property, such as a desktop valuation (comparing data from similar sales) or a restricted assessment (inspecting the property from the street).
Keep in mind that a bank’s valuation is not the same as the market valuation. The former is done for credit assessment purposes, and tends to be much more conservative than the amount the market might deem your property worth when listed.
How is LVR calculated when refinancing?
If you’re refinancing your mortgage, your LVR will look a little different compared to when you first took out a loan. For starters, depending on how far into the loan you are, the outstanding balance will have decreased. On top of that, your property’s current market value might have changed since you bought it. All of this can amount to a different LVR.
What does 80% LVR mean?
80% LVR means you borrow, in the form of a home loan, 80% of the value of a property.
In other words, you've paid 20% of the cost of the home (either as a deposit or through repayments), and you still owe the lender 80% of the cost of the home.
An 80% LVR is considered good by a lender. Anything over 80% is considered more risky by lenders.
What does 60% LVR mean?
If you have 60% LVR, it means you owe your lender 60% of the value of a home. You could also say you've got 40% equity in the property.
This is a very good LVR to have and may help you access lower interest rates as a result.
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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