LVR Explained & How to Calculate Available Equity
This video provides clear explanations and practical examples to help you understand the relationship between LVR and available equity. Robbie breaks down the jargon and guides you through the calculations, empowering you to make informed decisions about your property investments.
Mastering LVR & Equity: A Smart Investor’s Guide
In this video, Robbie, Founder and CEO of Axon Property Group, breaks down two essential concepts in property investing: Loan-to-Value Ratio (LVR) and Available Equity.
Using easy-to-understand examples, Robbie explains how to calculate your LVR and how banks determine how much equity you can actually access. He walks you through a practical scenario showing how you can leverage your available equity to purchase another investment property or reduce your home loan, without dipping into your own savings.
Understanding these fundamentals is key to building long-term wealth through smart property investing, especially if you’re serving in or transitioning from the ADF.
Want to take the next step in your property journey?
Sign up for one of Axon’s free training seminars today and learn how to use your ADF benefits and equity to grow a property portfolio with confidence.
Video Transcript
Just like when you’re in the military, the property investment space has its own jargon and acronyms. One we’re going to talk about today is LVR and available equity.
Loan-to-Value Ratio, or LVR, is the ratio or percentage that a loan is relative to the value of the property.
Let’s take a look at how that works. In a simple example, you’ve got a $500,000 house and a loan of $400,000.
The formula is:
Loan ÷ Value × 100 = LVR (%)
So, $400,000 divided by $500,000, multiplied by 100, equals an 80% LVR.
Now let’s look at a real-time example of why it’s important to understand your LVR—and how to use it.
We’re going to talk about available equity again. Say you have a $500,000 house and a $320,000 loan against it.
Your total equity would be the full value of the home minus your loan:
$500,000 – $320,000 = $180,000
However, banks typically only allow you to borrow up to 90% of the property’s value, which in this case is $450,000. They usually keep 5–10% as a buffer to protect themselves.
So, your available equity is:
Property Value – Current Loan – Security Buffer
$500,000 – $320,000 – $50,000 = $130,000 available equity
Now, you can take that $130,000 and use it to purchase another investment property—or even put it towards paying off your own home.
That’s how you use equity in a smart way as a property investor.