Loan-to-Value Ratio Calculator

What is the meaning of LVR?

LVR stands for Loan-to-Value Ratio which measures property value against the borrowing amount. For example an 80% LVR means that 20% of the purchase amount is coming from a deposit and 80% is coming from a loan. Generally a higher Loan-to-Value Ratio means a higher risk loan, and sometimes banks are less likely to offer a loan or may add on costs like Lenders’ Mortgage Insurance (LMI) or higher interest rates. A lower LVR means that a smaller loan is required to purchase a property.

What is the average LVR in Australia?

In 2024 the average property purchase amount in Australia is estimated to be $973,300. Most data suggests the average deposit amount is estimated to be around $119,560, much less than the typical 20% deposit of $194,660. The average loan amount in 2024 is reported to be $642,120. Taking these figures discover that the average Loan-to-Value Ratio (LVR) in Australia in 2024 is between 12% and 34%.

How to calculate LVR?

LVR is calculated by dividing the loan amount by the purchase amount of a property. The bank may use the appraisal amount instead of the purchase amount if it is lower. The formula to calculate Loan-to-Value ratio is:

Loan-to-Value Ratio = (Loan Amount / Property Amount) × 100

The result is expressed as a percentage, for example 20%.