Home loan comparison

Lender

Variable
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loans.com.au – Variable Home Loan (LVR < 90%)

    Variable
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    HSBC – Home Value Home Loan (Principal and Interest) (LVR < 80%)

      Fixed
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      Newcastle Permanent – Fixed Rate Home Loan (Principal and Interest) 1 Year

        Variable
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        Beyond Bank – Purple Basic Variable Home Loan (New Customer) (LVR 60%-80%)

          Variable
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          Athena – Straight Up Owner Occupied - Celebrate (LVR 50%-60%) (Principal and Interest)

            Fixed
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            IMB Bank – Fixed Rate Home Loan (Principal and Interest) 1 Year (LVR ≤ 80%)

              Variable
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              Liberty Financial – Liberty Low Rate Home Loan (LVR < 95%)

                Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of July 25, 2024. View disclaimer.

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                Purchase: Loan-to-Value Ratio Calculator

                The information contained in this article is intended to be of a general nature only. It has been prepared based on the details provided by you, and without taking into account your objectives, financial situation or needs. Before acting on this information, we recommend that you consider whether it is appropriate for your circumstances. We recommend that you seek independent legal, financial, and taxation advice before acting on any information in this article.

                What is LVR?

                When you’re borrowing money from a lender to buy a house, you often hear the term LVR, which stands for loan-to-value ratio. LVR represents a percentage of the loan versus the total value of your property.

                For instance, if you purchase a home for $500,000 and put down a $100,000 deposit, you will be borrowing $400,000. Based on this scenario, LVR can be calculated using the formula below:

                ($400,000 loan amount ÷ $500,000 property value) x 100 = 80% LVR

                Upfront costs when taking out a home loan are not included in the LVR calculations. These upfront costs include transactions like conveyancing and stamp duty fees. 

                How does LVR affect home loans? 

                LVR applies to all property loans whether you are buying or refinancing an owner-occupier property or an investment property. LVR can also be the risk basis of the lender, meaning if you have a low LVR, lenders consider you as a lower risk borrower. A higher LVR, typically above 85%, puts you at a higher risk and it is likely you will be required to pay lender’s mortgage insurance (LMI).

                A higher LVR will not only trigger you to pay LMI, but it can also leave you with larger mortgage repayments because you have borrowed more money. In comparison, borrowers with a lower LVR often aim to have 20% of the property value as their deposit, reducing their regular repayments.

                Take note that each lender will have their own maximum LVR, so some lenders may be able to offer a loan with an LVR up to 90% or even 95%.

                How does a lender determine the property value when working out LVR?

                Lenders will require a property valuation to determine the price of the house you’re buying. They will typically obtain their own independent property valuation. When it comes to determining the price, the valuation firm will consider the size of land and house, type of property (if it’s a house, townhouse or apartment), number of rooms, location, fixtures and fitting, and the overall condition of the house.  

                What is a good LVR?

                A good LVR score to aim for when you apply for a home loan is 80% or below, to avoid paying for lender's mortgage insurance. LMI is designed to protect the lender in the instance their borrower cannot make repayments on their mortgage.

                A lower LVR can also result in a lower monthly repayment, so it’s recommended to save at least 20% of the property price as the deposit on your property. 

                Can LVR change over the loan term?

                It's possible for the LVR to change because property prices can change over time, impacting the loan amount. If you are not able to pay off much of the principal of the loan even within a few years, the value of the property can increase and decrease, influencing your LVR. Your LVR will also be affected by your repayments. As you continue to pay down your loan, your equity is likely to increase, reducing your LVR.

                How can I improve my LVR before I purchase a property?

                The best way you can improve your LVR is to boost your home deposit. Saving a big deposit will not only reduce your monthly mortgage repayment and help you avoid paying for LMI, but it can also get you a lower interest rate which can help you save money overall. 

                Another way to improve your LVR is to look to buy a more affordable property, and ensure you are getting a fair valuation on it before buying.

                Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of 9 July 2024.

                ^The addition of offset sub-account means your comparison rate will change.

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