LVR & equity calculator

LVR = current loan balance ÷ current property value, expressed as a percentage. So a $400k loan on a $500k property is 80% LVR. It's the single biggest input lenders use when assessing a new loan or refinance. Above 80% LVR you typically pay Lenders Mortgage Insurance (LMI). Below 60% LVR you usually qualify for the bank's best rate tier. As you repay principal AND the property grows in value, your LVR drops naturally — this calculator shows that path year by year.

80% is the LMI threshold. Above 80%, Australian lenders require you to take out Lenders Mortgage Insurance — a one-off premium that protects THE BANK if you default. LMI on a $700k loan at 88% LVR can be $15,000–$25,000 depending on lender. You can avoid LMI by saving a larger deposit (lifting LVR to ≤80%) or waiting for the property to grow / loan to amortise enough to cross the threshold (which is exactly what this calculator projects).

Two forces work on LVR every year: your loan amortises (P&I repayments shrink the principal), AND the property's value grows by your assumed capital growth rate. Both reduce LVR. The calculator runs both — month-by-month loan amortisation (handling IO → P&I revert if applicable) and year-by-year capital growth — and surfaces the LVR for each year of your hold period. The "Year LVR drops below 80%" tile is the answer to "when can I refinance to remove LMI / drop to a better rate?".

Yes — that's the whole leverage strategy. As LVR drops, the bank will let you "release equity" by topping up your loan back to a higher LVR (typically up to 80% to avoid new LMI). E.g. a property bought for $500k with $100k deposit might be worth $700k after 5 years with a $370k remaining loan — that's 53% LVR. The bank will lend you another $190k (taking you back to ~80%) for use as deposit on the next property. The calculator shows you the equity build to feed this decision.

The calculator uses gross loan balance — it doesn't reduce for offset. Two reasons: (a) banks calculate LVR off gross debt for LMI / serviceability purposes, even though your effective interest is lower; (b) modelling offset properly needs a separate balance projection that's beyond a single-property snapshot. If you have $100k in offset against a $500k loan, your CASH-flow interest is calculated on $400k (you can lower the interest rate input slightly to approximate), but your LVR for refinance / equity-release purposes is still based on the $500k gross.

This calculator is single-property. Portfolio-level LVR = total loans across all properties ÷ total property value. Banks calculate this across your whole exposure when assessing serviceability for a new loan. Cross-collateralisation (one bank holding multiple properties as security on a single loan facility) makes portfolio LVR even more important. If you have multiple properties and need a portfolio view, run this calculator once per property and sum the loans / values.

LVR measures debt-to-asset on ONE property. Gearing (a broader investing concept) is the ratio of borrowed money to your own equity across the whole position — and it can refer to negative gearing (annual income loss) or financial gearing (balance sheet leverage). The two concepts intersect: a high-LVR property is highly geared. But you can have a low-LVR property (low financial gearing) that is still negatively geared (annual cashflow loss) because rent doesn't cover holding costs + interest.

Banks lend up to 95% LVR with LMI in Australia, but "what bank will lend" and "what's safe" are different questions. Conservatively-leveraged investors target 60-70% LVR within 3-5 years of purchase — that's when your bank starts offering premium rate tiers and the property has enough equity buffer to weather a 20-30% market downturn without going underwater. The calculator lets you see how aggressively your specific scenario de-leverages over time.