LVR vs Equity: The Basic Difference

LVR stands for loan-to-value ratio. It tells you what percentage of a property's value is represented by the loan.

Equity is the difference between the property's current value and the outstanding loan balance.

In simple terms, LVR is a percentage, while equity is usually expressed as a currency amount.

LVR

Loan-to-Value Ratio

Measures the loan as a percentage of the property's value.

Equity

Property Equity

Measures the value left after subtracting the outstanding loan from the property value.

For a basic introduction, see What Is LVR? and What Is Property Equity? .

How Are LVR and Equity Calculated?

LVR Formula

Loan-to-Value Ratio
LVR = (Loan Amount ÷ Property Value) × 100

Equity Formula

Property Equity
Equity = Property Value − Loan Balance

The two calculations use the same basic inputs, but produce different types of information.

For the mathematical breakdown, read LVR Formula and How Is Property Equity Calculated? .

LVR vs Equity Example

Suppose a property is worth $600,000 and the outstanding mortgage balance is $420,000.

Equity:

$600,000 − $420,000 = $180,000 equity

LVR:

$420,000 ÷ $600,000 × 100 = 70% LVR

The borrower therefore has $180,000 of property equity and a 70% LVR.

Notice that the two figures tell different parts of the story: $180,000 describes the equity amount, while 70% describes the loan's proportion of the property value.

You can test the same calculation using the LVR & Equity Calculator .

How LVR and Equity Are Related

LVR and equity are mathematically connected.

If there is a single property value and loan balance, the equity percentage is the complement of the LVR:

Equity Percentage
Equity % = 100% − LVR

For example, a 70% LVR corresponds to a 30% equity share of the property's value.

A 90% LVR corresponds to 10% equity relative to the property's value.

This relationship is useful for understanding why reducing LVR generally means increasing your equity percentage.

See How LVR and Equity Are Related for a deeper explanation.

LVR vs Equity Comparison

Feature LVR Equity
What it measures Loan relative to property value Property value minus loan balance
Typical unit Percentage Currency amount
Higher value means More borrowing relative to property value More value remaining after the loan
Changes when loan is paid down Usually decreases Usually increases
Changes when property value rises Usually decreases Usually increases

What Happens When LVR Is High or Low?

LVR and equity move in opposite directions when the property value and loan balance are considered together.

Higher LVR

A larger percentage of the property's value is financed by debt. This generally means less equity relative to the property's value.

Learn more: What Is a High LVR?

Lower LVR

A smaller percentage of the property's value is financed by debt. This generally means more equity relative to the property's value.

Learn more: What Is a Low LVR?

How Property Value Changes Affect LVR and Equity

Property value is an important input in both calculations.

If your loan balance stays at $400,000 and your property's value rises from $500,000 to $600,000:

Before the increase:

LVR = $400,000 ÷ $500,000 = 80%

Equity = $500,000 − $400,000 = $100,000

After the increase:

LVR = $400,000 ÷ $600,000 = 66.67%

Equity = $600,000 − $400,000 = $200,000

In this example, the property value increased by $100,000, equity increased by $100,000 and LVR decreased.

See: What Happens to LVR When Property Value Increases?

What Happens When You Pay Down Your Loan?

Paying down the mortgage can also change both measures.

If the property value stays at $600,000 and the loan falls from $420,000 to $360,000:

Before:

LVR = $420,000 ÷ $600,000 = 70%

Equity = $600,000 − $420,000 = $180,000

After:

LVR = $360,000 ÷ $600,000 = 60%

Equity = $600,000 − $360,000 = $240,000

The loan has fallen by $60,000, equity has increased by $60,000, and LVR has fallen from 70% to 60%.

Read What Happens to LVR When You Pay Down Your Loan? .

Can You Have Negative Equity?

Yes.

If the outstanding loan is greater than the property's value, the equity calculation becomes negative.

Example:

Property value = $300,000

Loan balance = $330,000

Equity = $300,000 − $330,000 = −$30,000

LVR = $330,000 ÷ $300,000 × 100 = 110%

This situation is commonly described as negative equity. An LVR above 100% can occur when the outstanding debt exceeds the property's current value.

Learn more: Can LVR Go Above 100%? and What Is Negative Equity? .

LVR, Equity and Usable Equity

Having equity does not necessarily mean that all of it can be borrowed.

Lenders may use their own maximum-LVR limits, affordability assessments, loan policies and property valuations when considering additional borrowing.

A common educational estimate of usable equity is the amount remaining between a target maximum loan amount and your existing loan balance.

For example, if a property is worth $700,000, the existing loan is $350,000 and the target LVR is 80%, the target loan amount is:

Target Loan Amount
$700,000 × 80% = $560,000

The difference between $560,000 and the existing $350,000 balance is $210,000. This is an educational usable-equity estimate, not a guarantee that $210,000 can be borrowed.

Use the LVR & Equity Calculator to explore this relationship.

Also read What Is Usable Equity? .

Does LVR or Equity Affect Borrowing?

Both can be relevant, but they are used differently.

LVR provides a percentage-based view of the loan relative to the property's value. Equity shows how much value remains after subtracting the debt.

A lender may consider LVR alongside income, expenses, existing debts, credit history, loan purpose, property characteristics and other factors.

Therefore, having substantial equity does not automatically mean you will be approved for additional borrowing.

See How Does LVR Affect Borrowing? and Does LVR Affect Loan Approval? .

Can LVR and Equity Affect Interest Rates?

LVR can sometimes form part of a lender's pricing model. Lower LVR may represent a lower-risk position, while higher LVR may represent greater lender exposure.

This can influence available pricing with some lenders, but there is no universal interest-rate rule based only on LVR.

Equity is closely related because more equity generally means a lower LVR when the property value and loan balance are considered together.

Read: Does LVR Affect Interest Rates?

LVR vs Deposit

LVR and deposit are also related, particularly when purchasing a property.

A larger deposit generally means a smaller loan relative to the property's purchase value, which can produce a lower LVR.

However, deposit and equity are not interchangeable concepts. Deposit generally refers to money contributed toward a purchase, while equity refers to the value remaining in an owned property after debt is deducted.

Learn more: LVR vs Deposit and How Much Deposit Do I Need? .

LVR and Equity When Refinancing

Equity and LVR can become particularly important when refinancing.

If your property value has increased or your mortgage balance has fallen, your LVR may be lower than it was when you first borrowed.

A lower LVR may change the range of refinance products or pricing available to you, depending on the lender's current criteria.

Use the Refinance LVR Calculator to compare your current and proposed loan position.

Continue with What Is Refinance LVR? and How Does LVR Affect Refinancing? .

Compare LVR Levels

Because LVR is a percentage, comparing different LVR levels makes it easier to understand how debt and equity relate.

LVR Equity Percentage General Relationship
60% 40% More equity relative to property value
70% 30% Moderate debt-to-value position
75% 25% Moderate-to-higher LVR
80% 20% Common comparison point
85% 15% Higher debt relative to value
90% 10% High LVR position
95% 5% Very high LVR position

Explore the individual 60% LVR, 70% LVR, 75% LVR, 80% LVR, 85% LVR, 90% LVR and 95% LVR guides.

Calculate Your LVR & Equity

Enter your property value and loan balance to see your LVR, estimated equity and related figures.

LVR Calculator LVR & Equity LVR & Deposit LVR & LMI Refinance LVR Maximum Loan From LVR

Build your understanding with the rest of the LVRcalc topic cluster:

LVR & Equity Glossary

LVR: Loan-to-value ratio. The loan amount expressed as a percentage of the property's value.

Equity: The difference between the property's value and outstanding loan balance.

Equity percentage: The percentage of the property's value represented by equity. With a single loan and the same property value used for both calculations, it can be expressed as 100% minus LVR.

Usable equity: An estimate of equity that may potentially be available for additional borrowing under a chosen LVR limit. Actual availability depends on lender assessment.

Explore more terms in the LVR Glossary .

Frequently Asked Questions

Is LVR the same as equity?

No. LVR is a percentage showing how large the loan is relative to the property value. Equity is the amount left after subtracting the outstanding loan from the property value.

Is a lower LVR better for equity?

Generally, a lower LVR means a greater equity percentage relative to the property's value, assuming the same property and loan relationship.

Does more equity mean a lower LVR?

Usually, when comparing the same property value and loan balance, more equity relative to the property value corresponds with a lower LVR.

How do I calculate my property equity?

Subtract your outstanding loan balance from your current property value. For example, a $600,000 property with a $400,000 loan has $200,000 of equity.

How do I calculate my LVR?

Divide the loan amount by the property value and multiply by 100. You can also use the LVR Calculator .

Can property value increases increase equity?

Yes. If the loan balance stays unchanged, an increase in property value generally increases equity and decreases LVR.

Can I borrow all of my home equity?

Not necessarily. Lenders may apply maximum-LVR limits, affordability tests, credit criteria, property valuation requirements and other conditions. The amount of equity you have is not automatically the amount you can borrow.

Can LVR be over 100%?

Yes. If the outstanding loan exceeds the property's value, the LVR can exceed 100% and the borrower may have negative equity.

See Your LVR and Equity Together

Calculate your current loan-to-value ratio and estimate your property equity from the same property and loan figures.

Calculate LVR & Equity →
Disclaimer: LVRcalc provides general educational information and calculators only. Property values, loan balances, lending criteria, maximum LVR limits, interest rates, fees and borrowing outcomes vary between lenders, countries and individual circumstances. Estimated usable equity is not a guarantee of borrowing availability. Always confirm current lending terms and property valuations with the relevant lender or a qualified financial professional.