Bank LVR application
Question from Michael updated on 13th September 2017:
When you are refinancing a property (either an owner occupier property or an investment property) will the bank apply the LVR ratio against the original purchase price or against the current value? For example: I purchased a place in 2010 for $300,000 and currently owe $250,000. The property is now valued at around $650,000.
Our expert Nick Ashford responded:
Generally the bank will use the cost price of the property if it was acquired recently. A rule of thumb would be within six months. After this passage of time though the focus goes to the market value as determined by registered valuation. I would suggest that in your specific example the bank would be assessing your LVR against the current market value of $650,000.
Nick Ashford and the team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.