Understanding Loan-to-Value Ratios

Investing in property can be an excellent addition to any portfolio, but as with all investments, it is essential to evaluate and understand the risks. One of the most important factors when it comes to assessing the risks associated with property investment is the loan-to-value ratio (LVR), sometimes called a loan-to-valuation ratio or loan-to-market-value ratio.

Put simply, LVR is the amount of a loan compared to the value of the asset it is secured against. For those looking to invest in mortgages, considering LVR is an important part of the process, as understanding LVR helps establish parameters for risk while contributing to the rate of return.

Understanding the Importance of LVR

LVR is a key metric used in the property market to evaluate the risk of a particular investment. It is calculated by dividing the amount of the loan by the value of the property. For example, if the borrower needs $400,000 for a property valued at $500,000, the LVR would be 80%. The higher the LVR, the higher the risk is considered to be.

LVR plays an important role in the property market because it is used by lenders to determine how much they are willing to lend a borrower. If the LVR is too high, the lender may be more reluctant to provide financing for the investment loan. LVR that is lower indicates a less risky investment and may result in more favourable loan terms.

How Arthurmac Uses LVR

LVR is at the core of Arthurmac’s investment-making process. It is a crucial factor in determining the risk of any particular mortgage fund investment, and the amount that is lent against a property. This helps set out an understanding of the risk involved, but is not the only factor when it comes to making investment decisions. 

In other words, Arthurmac does have a set max LVR we are willing to consider, however our team of experts also takes into account other critical factors, such as a borrower’s history, the location of the asset and its general state. A borrower with a strong track record and a sound exit strategy has a higher chance of approval.

Arthurmac uses only the most trustworthy and proven valuers for properties in our private mortgage funds, minimising the risk of inaccurate valuations. We ensure that the LVR accurately represents the value of properties our clients invest in.

By using trusted panel of valuers and taking into account all relevant factors, Arthurmac has a proven history of providing our investors with a level of security and confidence that is hard to match.

Secure Investments With Arthurmac

LVR is essential when it comes to investing in property, which is why Arthurmac takes great care in using LVR to set parameters for risk. We use only trusted valuers who play a critical role in ensuring that our LVR assessments are accurate, and our clients’ investments are protected.

If you are interested in learning more about how Arthurmac can help you find private mortgage investment opportunities, get in touch via 1300125556 to speak with one of our experienced advisors. Alternatively, you can complete our online contact form to hear back from us soon.


Disclaimer: Please be advised that it is highly recommended to conduct thorough research and seek guidance from a financial expert prior to making any investment decisions. It is further recommended to regularly review your investment portfolio and make necessary adjustments to ensure it aligns with your financial goals.

Stuart Styles

Managing Director Stuart has 16 years of experience as a Financial Services professional having worked previously in asset finance & management roles within the Motor Industry.