Finance

[WebBoard]

From: Mike .


calculating LVR
From: PETER.L
Date: 8/20/00
Time: 9:28:43 AM

Is this the way to calculate your LVR?

Assets minus Liabilities (net Worth)
________________________________
Total value of your assets

I have taken into account as assets: cash held in bank, direct shares, managed funds, our home and our 2 ips, and also our superannuation.

Is this the correct way? I have calculated a 41% lvr. Is this a good lvr ? How do I use it to obtain more loans? Basically can you tell me more about the LVR ratio?

Thankyou to all.

 

[WebBoard]

Buzz

Reply: 1
From: Mike .


Re: calculating LVR
From: Buzz
Date: 8/21/00
Time: 1:58:53 AM

Peter L

To calculate your Loan Value Ratio (LVR) simpley divide your total debt by the total value of your properties.

<table border="0" cellspacing="3">
<tr>
<td align="right">eg. Total Loans (Debt)
$300,000</td>
</tr>
<tr>
<td>Total Value (Properties) $400,000</td>
</tr>
<tr>
<td align="right">= 75% LVR</td>
</tr>
</table>

To calculate what you can borrow take the total value of your properties minus the debt. The bank will give 80% of that which becomes a 20% deposit on an investment property.

<table border="0" cellspacing="3">
<tr>
<td>eg. $400,000</td>
</tr>
<tr>
<td align="right">- $300,000</td>
</tr>
<tr>
<td align="right">= $100,000</td>
</tr>
<tr>
<td align="right">x 80%</td>
</tr>
<tr>
<td align="right">= $ 80,000</td>
</tr>
</table>

If $80,000 is the 20% deposit you can purchase $400,000 worth of property.
ie. $80,000 deposit, $320,000 of borrowings.

Now your LVR is $700,000 Debt divided by $800,000 worth of properties = 87.5% LVR. Of course if you spend $400,000 on investment properties and they value up higher your LVR decreases, increasing your wealth.