What Is a High LVR?
A high Loan-to-Value Ratio means the amount you borrow is large compared with the value of the property securing the loan. Learn what makes an LVR high, why it matters, and how it can affect deposits, equity, borrowing, mortgage insurance and refinancing.
A high LVR generally means you are borrowing a large percentage of a property's value. There is no single worldwide percentage that defines "high" because lending policies differ by lender, country, product and borrower. However, LVRs such as 80%, 85%, 90% and 95% represent progressively higher levels of borrowing relative to property value.
What Is a High LVR?
LVR stands for Loan-to-Value Ratio. It compares the amount of a property loan with the value of the property.
A high LVR means the borrower has relatively little equity or upfront capital compared with the amount being borrowed. For example, an 90% LVR means a loan represents 90% of the property's value, while the remaining 10% represents the difference between the property value and the loan amount.
The easiest way to understand your current position is to use the LVR Calculator. You can enter your property value and loan amount to see your LVR, estimated equity and equity percentage.
What LVR Is Considered High?
There is no universal cutoff for a high LVR. Instead, think of LVR as a spectrum: as the percentage increases, the loan becomes larger relative to the property's value and the borrower's equity cushion becomes smaller.
| LVR | General position | Property value financed |
|---|---|---|
| 60% | Lower leverage | 60% |
| 70% | Moderate leverage | 70% |
| 75% | Moderate-to-higher leverage | 75% |
| 80% | Higher leverage | 80% |
| 85% | High leverage | 85% |
| 90% | Very high leverage | 90% |
| 95% | Very high leverage | 95% |
These descriptions are educational rather than universal lender classifications. Explore the individual 60% LVR, 70% LVR, 75% LVR, 80% LVR, 85% LVR, 90% LVR and 95% LVR guides for detailed examples.
High LVR Example
Suppose a property is valued at $500,000 and the outstanding loan is $450,000.
In this example, the loan represents 90% of the property's current value. The difference is $50,000, which represents approximately 10% equity before considering other factors such as transaction costs or additional secured debt.
You can test the same calculation using the LVR Calculator.
Why Is a High LVR Important?
LVR matters because it gives lenders and borrowers a simple way to understand how much of a property's value is being financed by debt.
Less Equity Cushion
A higher LVR generally means less equity relative to the property's value.
Greater Market Sensitivity
With less equity, a fall in property value can have a larger effect on the equity position.
Potential Insurance Costs
Some lending arrangements may require or price mortgage insurance differently at higher LVRs.
Borrowing Considerations
LVR can be one factor considered alongside income, credit, affordability and other lending criteria.
High LVR and Your Deposit
LVR and deposit are closely related when buying a property, but they are not exactly the same concept.
If a property costs $500,000 and you finance $450,000 through a mortgage, the difference is $50,000. Ignoring taxes, fees and other purchase costs, that represents 10% of the property value.
A larger upfront contribution generally means a smaller loan relative to the property value and therefore a lower LVR.
Learn more in LVR vs Deposit: What's the Difference? and How Much Deposit Do I Need? .
You can also experiment with different deposit sizes using the LVR & Deposit Calculator .
High LVR and Equity
Equity is broadly the difference between a property's value and the outstanding loan secured against it.
A higher LVR generally corresponds to a smaller equity position, assuming the same property value and loan structure.
For a deeper explanation, see LVR vs Equity , How Is Property Equity Calculated? and What Is Usable Equity? .
If you want to estimate your equity position and see how a target LVR could affect potential usable equity, try the LVR & Equity Calculator .
High LVR and Mortgage Insurance
Higher LVR borrowing can sometimes be associated with mortgage insurance or similar lender risk-management arrangements. Terminology and requirements vary by country, lender and loan type.
Mortgage insurance is separate from LVR. LVR measures the relationship between the loan and property value; mortgage insurance is a separate cost or protection arrangement that may apply to certain loans.
Read LVR vs LMI for the difference, or learn more about What Is Mortgage Insurance? .
For an illustrative calculation, the LVR & LMI Calculator lets you enter an insurance rate yourself rather than assuming one universal insurance pricing model.
Does a High LVR Affect Borrowing?
It can. LVR is often one part of a lender's assessment, but it is not the only factor.
A lender may also consider income, existing debts, affordability, credit history, employment, loan purpose, property characteristics, loan structure and other risk factors.
Therefore, a high LVR does not automatically mean a loan will be rejected, just as a low LVR does not automatically guarantee approval.
See the related guide: How Does LVR Affect Borrowing?
You may also want to read Does LVR Affect Loan Approval? .
Can a High LVR Affect Interest Rates?
It can, depending on the lender and loan product. Some lenders use LVR as one factor when determining pricing or eligibility, while others use different pricing structures.
There is no universal rule that says every high-LVR borrower will receive a higher interest rate.
For a deeper explanation, read Does LVR Affect Interest Rates? .
Is a High LVR Risky?
A high LVR can create a smaller equity buffer. This becomes particularly important if property values decline.
Consider a property worth $500,000 with a $475,000 loan. The LVR is 95%. There is only $25,000 of value above the loan balance before considering other costs or debts secured against the property.
If the property value falls, the LVR rises unless the loan balance falls sufficiently at the same time.
Learn more about this relationship in What Happens to LVR When Property Value Falls? and Can LVR Go Above 100%? .
How Can You Lower a High LVR?
There are several ways your LVR can decrease. The most appropriate option depends on your financial situation and the property.
- Pay down the loan. Reducing the outstanding balance lowers the numerator in the LVR calculation.
- Increase your deposit when buying. A larger upfront contribution means you need to borrow less.
- Build property equity. Loan repayment and changes in property value can affect your equity position.
- Consider a new valuation. If the property's current market value has changed materially, an updated valuation may change the calculated LVR.
- Review refinancing options. Refinancing does not automatically lower LVR, but changes in loan balance, property value or loan amount can change the ratio.
Read the complete guide: How to Lower Your LVR .
High LVR and Refinancing
LVR can be particularly relevant when refinancing because the lender may compare the proposed loan amount with the property's current value.
Your refinance LVR can be calculated using the proposed new loan amount and current property value.
Use the Refinance LVR Calculator to compare your current LVR with a proposed refinance loan.
You can also read What Is Refinance LVR? and How Does LVR Affect Refinancing? .
Explore Different LVR Levels
Looking at specific LVR percentages makes it easier to understand how leverage changes. Explore each level below:
Use the LVRcalc Calculators
Different LVR questions require different calculations. LVRcalc provides a group of related calculators so you can explore the numbers from different angles.
Continue Learning About LVR
High LVR is only one part of understanding loan-to-value ratios. Continue through the LVRcalc guide cluster to understand how LVR interacts with deposits, equity, mortgage insurance, refinancing and loan decisions.
LVR Terms to Know
If you're new to mortgage terminology, the LVR glossary provides quick definitions for loan-to-value ratio, equity, loan balance, property value, mortgage insurance and related terms.
Frequently Asked Questions
What is considered a high LVR?
There is no universal definition. As LVR increases, the loan represents a larger percentage of the property's value. LVRs such as 85%, 90% and 95% are commonly described as high or very high leverage in educational contexts, but lender policies vary.
Is 80% LVR high?
An 80% LVR represents a loan equal to 80% of the property's value. Whether it is considered high depends on the lender, market and loan product. Compare it with the 80% LVR guide for a detailed example.
Is 90% LVR considered high?
A 90% LVR means the loan represents 90% of the property's value, leaving a 10% difference between property value and loan amount. It is generally considered a high level of leverage, although exact lender policies vary.
Is 95% LVR high?
Yes, 95% represents a very high level of leverage because the loan represents 95% of the property's value. The borrower has a relatively small equity cushion compared with the property's value.
Does a high LVR mean I cannot get a loan?
Not necessarily. LVR is only one factor that may be considered in lending decisions. Income, affordability, credit history, existing debts, property characteristics and other criteria may also matter.
Does high LVR always mean higher interest?
No. Lenders use different pricing and underwriting models. LVR may influence pricing for some products, but there is no universal rule that every high-LVR loan has a higher interest rate.
Can I lower my LVR without selling my property?
Potentially. Paying down the loan can reduce LVR. If the property's value increases, the LVR can also fall even if the loan balance stays unchanged. An updated valuation may therefore affect the calculated ratio.
Can LVR go above 100%?
Yes. If the loan balance becomes greater than the property's current value, the calculated LVR is above 100%. See Can LVR Go Above 100%? for more information.
Know Your LVR Before You Make a Decision
Enter your property value and loan amount to calculate your LVR, estimated equity and equity percentage.
Calculate My LVR