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LVR (Loan to Value Ratio) is a financial term used to express the ratio of a loan amount to the value of the property the loan is being used to purchase.
LVR is expressed as a percentage and is calculated by dividing the loan amount by the value of the property.
It is an important measure for lenders, as they use it to assess the level of risk associated with lending money to a borrower.
Generally, higher LVR ratios represent greater risk, because lenders have a smaller amount of equity to use as a buffer if the borrower defaults on the loan.
Thus, borrowers with high LVR ratios may pay higher interest rates and may be required to pay lenders mortgage insurance (LMI) to protect the lender in case the borrower defaults on the loan.