Why LVR decides how much property can unlock
When property secures a business loan, the lender's first question is how much is already owed against it and how much buffer remains if the property ever had to be sold. That relationship is the loan-to-value ratio. A lower LVR means more cushion for the lender, which usually means more options and a simpler assessment for you. A higher LVR narrows the field and can change the type of facility on offer, for example from a first mortgage refinance to a second mortgage or caveat loan.
This calculator shows three things: the LVR today, the combined LVR once your new loan is added, and how much equity is usable at the maximum LVR you enter. If the new loan takes you past the maximum, it shows by how much, so you can adjust the amount or think about other security.
Total equity versus usable equity
If a property is worth $1,000,000 and $400,000 is owed, the owner has $600,000 of equity. But a lender willing to go to 70 per cent LVR would only lend up to $700,000 in total against it, so the usable equity is $300,000, half of the headline figure (illustrative numbers). Owners often overestimate what they can borrow because they think in total equity.
Things that change the picture
- Property type. Lenders treat houses, units, rural land, vacant land and specialised commercial property differently.
- Position on title. A second mortgage sits behind the first, so lenders take a combined view of both loans.
- Exit plan. For short-term secured loans, lenders want to see how the loan will be repaid. Read our guide on exit strategies.
Property-secured business loans typically range from $20,000 to $5,000,000. If you would like to know whether your property could support the amount you need, make one enquiry. There is no credit check to enquire and a real person will look at the numbers with you. Please include the property's location and an honest estimate of value in your enquiry; it saves time for everyone.
Frequently asked questions
What is LVR?
Loan-to-value ratio is the total lending secured against a property divided by the property's value, shown as a percentage. If a property is worth $1,000,000 and $400,000 is owed against it, the LVR is 40 per cent.
What maximum LVR do business lenders allow?
It depends on the lender, the property type and location, whether the loan is a first or second mortgage and the borrower's situation. There is no single standard, so use the figure a lender quotes you, or test a few conservative settings in this calculator.
What is usable equity?
Usable equity is how much more could be borrowed against a property before reaching a lender's maximum LVR. It is usually much less than the total equity, because lenders do not lend against the full value.
Do I need a formal valuation?
Policies differ. Some lenders order a formal valuation, others rely on desktop estimates or recent contracts, and some private lenders assess security differently again. Use a realistic, conservative value here rather than an optimistic one.
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