Loan-to-value ratio (LVR) calculator
LVR
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An estimate to help you plan, not an offer or approval. Lenders set their own policies, costs and limits.
Quick answer
This LVR calculator divides the total lending against a property by its value to give your loan-to-value ratio as a percentage. It also shows your equity in dollars and how far you are from two common lending limits, 70% and 80% LVR: either the extra you could borrow before reaching each limit, or the amount you'd need to pay down to get under it.
Key points
- LVR = everything owed against the property ÷ the property's value
- Count every registered loan and the full limit of any line of credit
- A lower valuation shrinks your headroom much faster than it moves the LVR
- Headroom to 70% or 80% is security room, not proof you can afford the repayments
Every property-secured business loan starts with the same calculation. The lender adds up what’s owed against the property, divides it by what the property is worth and gets the loan-to-value ratio. That one percentage decides whether the deal works, which lenders will look at it and how much room is left. Two numbers in, four answers out.
Entering your figures
Total lending against the property. Everything secured on the title, added together:
- the existing home loan or commercial mortgage
- any second mortgage or caveat loan already registered
- the full approved limit of any line of credit or overdraft secured on it
- the new loan you’re thinking about, if you want to see the combined LVR afterwards
Property value. What the property would realistically sell for now. If you have a valuation from the past six months, use it. If not, look at recent sales of similar properties nearby and lean towards the lower end.
Own more than one property? Add the debts together and the values together. The result is a blended LVR across your portfolio, which is roughly how a lender sees it when it takes more than one title as security.
What each result means
| Result | Calculation | What it tells you |
|---|---|---|
| LVR | lending ÷ value × 100 | The headline risk number, to one decimal place |
| Equity | value − lending | Your share of the property on paper |
| To reach 70% LVR | (value × 70%) − lending | “More available” if you’re under 70%, or “to pay down” if you’re over |
| To reach 80% LVR | (value × 80%) − lending | The same test against an 80% limit |
With the default figures, $650,000 owed on a $1,000,000 property, you’d see an LVR of 65.0%, equity of $350,000, $50,000 more available to 70% and $150,000 more available to 80%.
When the debt is already above a limit, the row turns negative. A home worth $800,000 with $620,000 owing sits at 77.5%. To reach 70% it would need $60,000 paid down, while there’s still $20,000 of room to 80%.
The valuation effect: a warehouse owner’s example
The owner of a logistics business holds a small warehouse they believe is worth $1.4 million, with $760,000 left on the commercial loan. They want funds to buy two more trucks and cover a fit-out.
On their own estimate:
- LVR: 54.3%
- Equity: $640,000
- To reach 70%: $220,000 more available
- To reach 80%: $360,000 more available
The lender’s valuer then comes in at $1.25 million, about 11% lower. Rerunning it:
- LVR: 60.8%
- To reach 70%: $115,000 more available
- To reach 80%: $240,000 more available
An 11% drop in value nearly halved the headroom to 70%. This is the most useful lesson in the calculator: because debt stays fixed while value moves, headroom is far more sensitive to the valuation than the LVR itself. Run your numbers at a cautious value before you plan around the result.
Got a figure in mind and want to know if it stacks up? Give us the property details; it’s an enquiry, not a credit application.
Why property type changes the limit
A lender’s comfortable LVR depends on how quickly and reliably it could sell the property if things went wrong.
- Residential property in established suburbs usually supports the highest limits.
- Commercial and industrial property typically attracts lower limits, more so for specialised buildings. See business loans against commercial property.
- Rural land depends heavily on location, size and use; our page on loans against rural property explains why.
- Vacant land often has the lowest limits of all, because it earns no income and the buyer pool is smaller.
Whether the lender holds a first or second position matters too. A first mortgage is repaid first from any sale, so lenders accept more debt in that position than behind someone else. A second mortgage or caveat is judged on the combined figure, which adds the new money to whatever is already registered ahead of it.
Headroom isn’t the same as borrowing power
“$240,000 more available” means there’s room on the title. It doesn’t mean a lender will lend it. Lenders also want to see:
- how the repayments will be met, from trading income, rent or a dated way out, like selling an asset or moving to cheaper finance
- what the money is for (business purposes only, for our lenders)
- your credit history and any ATO debt
- whether your existing lender’s mortgage allows another loan behind it
Banks tend to offer the keenest pricing on property-secured lending when your financials are up to date, so they’re worth asking first. If they’ve declined, want more than you can show, or can’t move fast enough, non-bank and private lenders put more weight on the security and the repayment plan than on tax returns. Our own partner brands HomeSec and EquityTap work in exactly this part of the market.
What the calculator leaves out
It doesn’t know the lender’s actual limit for your property type and postcode, what a formal valuation will say, or what fees and costs apply. It can’t see restrictions on the title, such as an existing caveat, and it won’t tell you whether the repayments are affordable. Use it to see where you stand, then use the tools below to go a step further.
Related calculators
- Property equity calculator: usable equity across residential, commercial and rural property.
- Second mortgage calculator: the largest second mortgage at different combined LVRs.
- Caveat loan calculator: short-term borrowing against equity, with total cost in dollars.
- Bridging loan calculator: covering the gap between buying and selling.
Equity on paper, funds in the account
If your LVR leaves meaningful room, that equity can fund growth, clear a tax bill or carry the business through a slow patch, often for less than unsecured finance would cost. The trick is matching the property and the purpose with a lender who’s comfortable with both.
Start with our one-minute enquiry. Your credit score is left alone when you send it. Nobody on our side blasts your information out to a panel; one specialist reviews the property and your plans, then rings you. Honest figures for value, existing debts and the sum required mean the options we raise should survive the valuer, not collapse when the report lands.
Frequently asked questions
How do I calculate LVR?
Divide the total of all loans secured on the property by its value, then multiply by 100. Moneysmart's example is a $450,000 loan on a $600,000 property, which is an LVR of 75%. For business lending, include every mortgage, caveat and secured facility on the title, not just the main home loan.
What LVR do business lenders allow?
Each lender sets its own limits by property type, location and loan type. Residential property in a capital city usually supports the highest LVR, while commercial, rural, specialised property and vacant land usually attract lower limits. The 70% and 80% markers in the calculator are common reference points, not a promise from any lender.
Which property value should I use?
Use a realistic figure, ideally a recent valuation or a cautious estimate based on comparable sales. The lender will order its own valuation, and that's the number your LVR is measured against. Running the calculator again at 10% below your estimate is a sensible stress test.
Do I count a line of credit at the limit or the balance?
Most lenders count the full approved limit, because you can draw it to the limit at any time. If you have a $200,000 line of credit with $50,000 drawn, enter $200,000 unless you're willing to reduce the limit as part of the new deal.
Does lenders mortgage insurance apply to business loans?
Lenders mortgage insurance is mainly a residential home loan concept, usually charged when the LVR on a home loan goes above 80%. Business loans secured by property are priced differently, typically through the lender's own rate and fees for the risk, so the LVR shapes the offer rather than triggering an insurance premium.