What Is the LVR Calculator?
Loan-to-Value Ratio (LVR) is a term used widely by lenders in Australia and New Zealand to measure how much you are borrowing against the value of a property. This calculator works out your LVR from two simple figures — the property value and the loan amount — and also shows the equity you hold and your equity as a percentage. It's a quick way to understand where you stand before applying for a mortgage or refinancing.
How to Use It
Enter the two figures the calculator asks for:
- Property Value ($): the purchase price or current market valuation of the property.
- Loan Amount ($): the amount you intend to borrow (or your current outstanding loan).
The calculator instantly returns your LVR, your dollar equity, and your equity percentage.
The Formula Explained
The LVR is calculated as:
$$\text{LVR} = \frac{\text{Loan Amount}}{\text{Property Value}} \times 100\%$$
The tool then derives your equity figures:
- $$\text{Equity (\$)} = \text{Property Value} - \text{Loan Amount}$$
- $$\text{Equity (\%)} = \frac{\text{Equity}}{\text{Property Value}} \times 100$$
Note that LVR % and Equity % always add up to 100%.
Worked Example
Suppose a property is valued at $600,000 and you borrow $480,000:
- \(\text{LVR} = (480{,}000 \div 600{,}000) \times 100 = \) 80%
- \(\text{Equity} = 600{,}000 - 480{,}000 = \) $120,000
- \(\text{Equity \%} = (120{,}000 \div 600{,}000) \times 100 = \) 20%
An 80% LVR is a common benchmark: borrowing above it often triggers Lenders Mortgage Insurance (LMI).
Frequently Asked Questions
What is a good LVR? Many lenders prefer an LVR of 80% or below, as it usually avoids Lenders Mortgage Insurance. A lower LVR generally means lower risk to the lender and may unlock better interest rates.
Why does my LVR matter for approval? Lenders use LVR to assess risk. A high LVR means less buffer if property values fall, so it can affect approval, interest rate, and whether you must pay LMI.
Should I use the purchase price or a valuation? Lenders typically use the lower of the purchase price or their own valuation. For a realistic estimate, enter the figure your lender is most likely to use.
