Loan to Value Ratio (LVR) is a complicated term that even financial institutions can have trouble simplifying.

At its core, it is a measure of how much of your property’s value you do not have debt against.

It is a calculation of your loan balance divided by the assessed value of your property. For example, a 75% LVR would be a $750,000 loan balance against a property value of $1,000,000.

If you’re looking to purchase a property it’s critical to know all the costs involved. This will give you a true indication of your loan size and how much your LVR will fluctuate as you look at different properties valued at different prices.

Many banks offer loan discounts and other savings if you have an LVR below 80%.