GLOSSARY · CAPITAL & STRUCTURING
What is LVR (loan-to-valueratio)?
The loan amount as a percentage of the property's assessed value. Lenders set maximum LVRs by asset type and risk; the lower the LVR, the more equity sits ahead of the lender.
IN PRACTICE
The value in the ratio is the lender’s valuation, not the price you paid or the figure you hope for, so a light valuation can change the whole facility. On a development site the question is usually which value is being used: as-is, or on completion. Before any application I want to know the likely valuation range, because that number decides the loan more than anything in the feasibility.
RELATED TERMS
THE TUESDAY LETTER One considered note, each week. The week's article and a short market note. Read by developers, lenders and private investors.