Let’s say that the bank completes a ‘Tentative on Completion valuation’ and values your property at $1,000,000 when it is complete. What if you want to buy land for $500,000 and then build a house for $500,000? You could try to get a bank valuation from another lender, reduce your loan to $480,000 so you are at 80% LVR and avoid LMI, get an 85% no LMI home loan or just pay the LMI premium. This is where a good mortgage broker can help. In this situation, you are close to an 80% LVR so there are some options that may get you a better deal. This would be considered medium-risk LVR by the lender, so they would require LMI for your loan. Property value: $600,000 (purchase price is ignored) If you buy a property for $500,000 however, the lender values it at $600,000 and you want to borrow 100% of the purchase price, then what is the LVR? The other common methods parents help are with a guarantor loan or a gifted deposit. In our industry, this is known as a ‘favourable sale’. Some lenders still require you to have a deposit and others do not. This is a common way for parents to help their adult children get into the property market. What if you are buying a property from your family for less than the market value? ![]() This would be considered high-risk LVR by the lender, so they would require LMI for your loan. If you borrow $900,000 against a property valued at $1,000,000, then what would your LVR be? Looking for ways to borrow at a high LVR?Ĭheck out 5 Ways To Borrow At A High LVR to do just that! The majority of lenders will require you to pay Lenders Mortgage Insurance (LMI) if you borrow over 80% LVR. Lenders use the LVR to assess your home loan application, as it indicates the likelihood that they will lose money if you can’t repay your loan.Īn LVR of 100% is a very high risk, whereas an LVR of 80% or less is considered safe by most lenders. The Loan-to-Value Ratio (LVR) of your loan is the percentage of the property value that you’re borrowing. Your actual LVR may be different depending on the lender’s criteria. It is important to note that the LVR calculator is only a rough estimate.
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