The Loan to Value Ratio (LVR) is the amount of the loan compared to the value of the property. The higher deposit you have, the lower your LVR will be. LVR is expressed as a percentage. For example, if the home you’d like to buy is valued by the bank at $400,000 and the loan you need to purchase it is $320,000. The LVR is: $320k ÷ $400k = 80% LVR. The LVR is based on the bank’s valuation of your property (which may differ from the amount you paid on the contract). From a lender’s perspective, the higher the LVR, the higher the cost and risk to the lender, which is why you’ll often see higher rates for higher LVR applications. Apart from getting a better rate, having 80% or lower LVR also means you could avoid paying Lenders’ Mortgage Insurance (LMI).