Finance

[WebBoard]

From: Mike .


LVR ?
From: Terri
Date: 07 Feb 2001
Time: 12:52:51

Hi

Can someone explain how you work out your LVR? Also what is better, a lower LVR or a higher LVR, don't mean to sound dumb but this is all new stuff to me.

Thanks, Terri

 

[WebBoard]

Rolf

Reply: 1
From: Mike .


Re: LVR ?
From: Rolf
Date: 07 Feb 2001
Time: 13:21:09

Hi

LVR is the Loan to Valuation Ratio, and is usually expressed as a percentage.

Say you had a property valued at $ 100 000 and you needed a 75 000 loan to buy it. The LVR is therefore (75 000/ 100 000) x 100 = 75 %.

As to what is better, depends from whose perspective. Lenders like the LVR to be as low as possible so that if they have to sell you up, there is no risk that they wont get all their $ back.

From a lot if investors point of view the higher the LVR they can get on their loan the better because they are putting less money down as deposit, so therefore they can buy more and more properties.

Regards, Rolf