Loan to Value Ratio - LVR

Loan to Value Ratio (LVR) is, to put it simply, the ratio of the loan amount to the value of the property. All loans have a component of mortgage insurances.

When the LVR is greater than 80%, the borrower will pay the insurance. Once the LVR is less than 80% the lender will generally pay for the insurance.

Most borrowers think that for LVR's less than 80% there is no insurance payable, this is not true.

To give an example, a property that is worth $400,000 with a mortgage of $300,000, has a Loan to Value Ratio of 75% and so no mortgage insurance is payable by the borrower.