How does your Loan-to-Value Ratio impact your home loan?

Lenders place a large emphasis on the LVR when assessing your loan application. The lower the LVR, the lower is the risk to the bank. Generally, lenders consider loans with a Loan-to-Value Ratio over 80% of the property value to be a higher risk.

The Loan-to-Value Ratio that banks will allow you to have will depend on the home loan amount you need, the location of your property, your credit history, your income and employment history and the type of loan you’re applying for.

If your LVR is greater than 80%, you’ll most certainly need to get Lenders’ Mortgage Insurance (LMI) for the loan to be approved.