Loan to Value Ratio (LVR):
The percentage of the value of the property that you propose to borrow.
Why is this important? Well if you are borrowing over a certain percentage value of the property additional costs and rules come into play – the less equity you will have in the home means the more risk your lender is taking on and they adjust the terms accordingly. That makes sense, right?
Presently a lower LVR (loan as a percentage of the value of the property) will also attract a lower interest rate, so valuations are very important and you should be realistic – but question a valuation that you think is definitely incorrect.