What Is LVR and Why Does It Matter for Your Refinance?

The Magic Number: 80%

Most lenders consider an LVR of 80% or less to be the "sweet spot." When you borrow 80% or less of the property's value, you typically avoid paying Lenders Mortgage Insurance (LMI). Lenders also often offer lower interest rates to borrowers at or below this level.

How to Calculate Your LVR

The calculation is simple: (Loan Amount / Property Value) x 100 = LVR.

For example, if your home is worth $1,000,000 and your remaining loan is $750,000, your LVR is 75%.

Why LVR Matters for Refinancing

As property values in many Australian suburbs have increased, your LVR may have naturally decreased even if you haven't made extra repayments. This "equity gain" may give you access to lower interest rate tiers that weren't available to you when you first took out the loan.

If your LVR has dropped below 70% or 60%, you may be eligible for further discounts that some lenders offer to borrowers with more equity.