Glossary
Glossary of terms and acronyms related to Australian banking, finance and investments.
Loan to Value Ratio (LVR)
The Loan to Value Ratio (LVR) refers to the amount of money borrowed against the total value of the property in a home equity loan. For example, a $100,000 loan against a home worth $200,000 has a Loan to Value Ratio of 50%. In Australia, loans with an LVR exceeding 80% require a mortgage insurance, as the risk of the borrower defaulting is too great for the lender. The value of the property is determined by the lender and is often significantly less than the purchase price, which may surprise first-time borrowers.
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