LVR guideline criteria vs Occupancy ratio

From: Lindsay Jones

What determines the LVR criteria used by the lending institutions ?

Is it the occupancy ratio?

high occupancy: long term rental tenant = 80% LVR

low occupancy: overseas student rental = 50% LVR

What could I expect the LVR criteria to be for a rental lease to company XYZ who would use it for their interstate executives ?

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Reply: 1
From: Rolf Latham

Hi Lindsay

Saleability of the security asset as percieved by the lender and or mortgage insurer. Note that this is not always the reality.

If you strike a problem understand that different lenders have different attitudes to different types of security. Some may lend to to 80 % for certain types of serviced apartment for example, whereas some wont even touch them.

Also,volatility of market is also an issue, and is one of the prime reasons that commercial properties rarely attract an LVR > 70%


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Reply: 2
From: Patrick O Brien

The banks (or more importantly the mortgage insurers) have lists of postcodes which dictate whether they will lend in that area. This is related to the perceived saleability as mentioned by Rolf.
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