LVR stands for Loan to Value Ratio and is calculated as a percentage of your loan amount over the value of your security property.
If you need to borrow 80% of the purchase price for the purchase of your home or an investment property, then your LVR is deemed to be 80%.
During late 2009 and early 2010, most lenders have dropped the LVRs they are prepared to work with. In 2008 and earlier, borrowers with a clean credit history and strong employment history were able to borrow up to 106% of their purchase price – ie. LVR of 106%. Since the world financial crisis such LVRs have dissipated and equally strong borrowers can not borrow more than 90%-95%.
Whereas applicants who are self employed or have some history of bad credit are required to have much larger deposits. Their LVRs sit a maximum of 80%.
Applicants looking to borrow over 80% need to also cost in to their purchasing expenses, the cost of LMI (Lenders Mortgage Insurance).