LVR is your Loan to Value Ratio and here’s why it is important.
Your LVR is calculated from your total purchase price less your deposit. It’s important to remember that the figure used is the property’s purchase price plus any costs and LMI (Lenders Mortgage Insurance) if you are adding that onto the loan. It is the percentage of the value you are borrowing essentially.
Your LVR is one of the main things that the banks will use to decide whether they will approve your loan or not. The lower your LVR the less risk factor is associated with your loan. The bank needs to be assured that if for some reason you cannot make your repayments they can get their money back from the property itself. An 80% LVR is ideal for banks and the benefit for you is that you will not need to pay LMI. Most of our lenders though will accept an LVR up to 95% but you will pay LMI, the higher your LVR is over 80% the more you will pay.
If you are unsure of your LVR Mortgage Choice website offers a calculator to give you a rough idea.
If you would like an exact calculation and help knowing what you need in order to get the best home loan for you come and visit us, we’d be happy to meet with you!