Glossary

Loan to value ratio (LVR)

What LVR means in commercial and private lending, how it's calculated, and why the ratio a private lender accepts differs from a bank's.

Loan to value ratio, or LVR, is the loan amount expressed as a percentage of the security property's value, and it is the single number most lenders quote first when discussing what they can lend. For a borrower, LVR sets the practical ceiling on how much can be raised against a given property: a 70% LVR on a property valued at $2m supports a facility around $1.4m before fees, regardless of how strong the borrower's income or track record is. Banks tend to apply LVR conservatively and on an "as is" or "as complete" basis depending on the product; private lenders and specialist funds will price and structure more flexibly around a higher LVR where the security, exit and borrower profile support it, though pricing typically rises as LVR increases.

Related

Loans that use this measure · LTC · GRV

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