What is LVR (Loan-to-Value Ratio)?

The direct answer

LVR stands for Loan-to-Value Ratio. It is the amount you borrow expressed as a percentage of the property's value. For example, if you buy a $500,000 property with a $100,000 deposit, your loan is $400,000 and your LVR is 80%.

Most lenders offer redraw at no cost on variable rate loans. Some charge a small fee per redraw, and many have minimum redraw amounts (typically $500). Fixed rate loans may have limited or no redraw access. Lendology compares 60+ lenders and considers redraw terms as part of finding the best loan for your needs.

Redraw vs offset - which is better?

Both redraw and offset accounts reduce the interest you pay on your loan. The key difference is access and control. An offset account is a separate bank account - your money is always accessible, and no one can restrict it. Redraw accesses extra repayments, and some lenders have been known to restrict redraw access.

For most owner-occupiers with significant savings, an offset account offers more flexibility and security. For borrowers making modest extra repayments, a free redraw facility may be perfectly adequate. Lendology evaluates both options based on your savings level and how you plan to use the funds.

Common questions

Frequently asked questions

Is redraw the same as an offset account?

No. An offset account is a separate transaction account - your money is always accessible. Redraw accesses extra repayments you have made above the minimum. Some lenders restrict redraw access, charge fees, or can even remove redraw availability. An offset is generally more flexible.

Can the lender take away my redraw?

Technically, some lenders have the ability to restrict or remove redraw access under certain circumstances. This happened during COVID when some lenders froze redraw on certain loan products. This is rare, but it is a key difference from an offset account where the money is always yours.

Are there tax implications for redraw on investment loans?

Yes - this is important. If you redraw funds from an investment loan for personal use, that portion of interest may no longer be tax-deductible. The ATO traces the purpose of borrowed funds carefully. Always speak with your accountant before redrawing from an investment loan.

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The information on this page is general in nature and does not constitute financial advice. Given Finance Pty Ltd (t/a Lendology) ACN 624 144 501 is authorised under LMG Broker Services Pty Ltd ACL 517192.