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Loan-to-Value Ratio (LVR) and Our Lending Scope Across Australia

At Innovate Funding, every deal starts with one key question: what is the true Loan-to-Value Ratio (LVR), including all fees and interest for the full term of the loan? Because we specialise in first mortgages, second mortgages, and combined facilities for business and investment purposes, we look beyond just the “headline” loan amount. We assess the gross LVR, taking into account:

  • Net loan amount

  • Capitalised interest

  • All lender and broker fees

  • Legal, valuation and settlement costs

This holistic view ensures your loan is structured safely for both you and the funder, and that we’re transparent about how much of your property’s value is being leveraged.

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If you’re not sure how your scenario fits within our lending scope, you can always compare it with our first mortgage loans and second mortgage loans pages for more detail on product types and parameters.

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What Is LVR and Why It Matters in Private Lending

Loan-to-Value Ratio (LVR) is the percentage of your property’s value that is being borrowed. In private lending, we place a strong emphasis on equity and exit strategy, so understanding LVR is critical. However, we do not just look at the net advance. We focus on the gross LVR, which includes:

  • Net funds advanced to you

  • Capitalised interest for the full term (for interest-prepaid facilities)

  • Lender establishment fees

  • Brokerage and introducer fees

  • Legal fees and expected disbursements

 

If a property is valued at $1,000,000 and you receive $650,000 net but total capitalised interest and fees bring the gross loan balance to $700,000, we assess the deal at 70% LVR, not 65%. This approach is embedded across our products, including:

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Our Lending Scope: First Mortgages, Second Mortgages and Combined Facilities

First Mortgage Lending Scope

Through our First Mortgage private lending solutions, we typically:

  • Lend from $50,000 to $20,000,000+

  • Structure terms from 3 to 12 months (longer by exception)

  • Fund against residential, commercial, industrial and land (zoned and unzoned)

  • Consider on-completion values for construction and development deals where appropriate

First mortgage loans are usually priced more sharply due to their senior position on title and are used for:

  • Business cash flow and working capital

  • Refinancing expiring facilities

  • Purchase of property for business or investment

  • Construction and development funding

You can see typical parameters and use cases on our dedicated first mortgage loans page.

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Second Mortgage Lending Scope

Our Second Mortgage solutions unlock equity behind an existing first mortgage without disturbing your main bank facility.

Within our lending scope, second mortgages are commonly used for:

  • Short-term business working capital

  • ATO and tax debt consolidation

  • Bridging between refinance events

  • Funding fit-outs, renovations and value-add projects

Key points:

  • Second mortgages are usually shorter term and higher rate than first mortgages

  • We focus heavily on combined LVR, not just the new top-up amount

  • We require a clear exit strategy, which may be a refinance, sale, or project completion

For a deeper dive into how seconds work in real-world scenarios, see:

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Combined First & Second Mortgage Structures

In many scenarios, the best outcome is a combined first and second mortgage facility with one private lender. This can simplify the structure, improve timing, and ensure the gross LVR remains within an acceptable range.

Examples include:

  • Refinance + top-up: Paying out an existing bank or private lender and releasing additional equity for business use under one facility.

  • Construction + equity release: Funding both build costs and short-term business purposes under a blended first and second position.

  • Restructure of multiple securities: Consolidating several properties under a single facility with different LVRs per property but a sensible portfolio LVR overall.

If you are unsure whether a stand-alone second mortgage or combined first/second is more suitable, our articles on what private lending is and how it works and what interest rates private lenders charge will give you more context on pricing, security position and risk.

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LVR by State and Territory – How We Assess Each Market

Our maximum indicative LVRs are influenced by property type, location and liquidity in each state. The figures below are a general guide only and assume:

  • Strong, saleable security

  • Business or investment purpose

  • Clear exit strategy

  • LVR assessed on gross amount (including capitalised interest and fees)

For more detail on each market, we also maintain dedicated pages under Private Lending Australia-Wide.

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New South Wales (NSW)

In New South Wales, particularly Sydney and major regional centres, we are typically comfortable with:

  • Up to 75% gross LVR (metro) on strong residential and good-quality commercial

  • Lower LVRs for specialised assets, regional or rural property

For more detail, refer to:

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Queensland (QLD)

Queensland continues to see strong demand from Brisbane through to the Gold Coast and regional hubs.

Typical parameters:

  • Up to 75% gross LVR (metro) on solid residential and commercial assets

  • Tighter LVRs in remote or niche regional locations

Learn more on our Private Lending in Queensland page, and location-specific pages like Private Lending in Toowoomba.

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Victoria (VIC)

In Victoria, particularly Melbourne and key regional centres:

  • Up to 70% gross LVR (metro) on well-located residential and commercial property

  • Lower limits for specialised or secondary assets

You can review our Victorian settings here:

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Western Australia (WA)

For Perth and broader Western Australia, we typically work to:

  • Up to around 65% gross LVR (metro) for first and second mortgages on quality assets

  • Lower LVRs for remote and mining-exposed localities

See our Private Lending in Western Australia page and Private Lenders in Perth for examples.

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South Australia (SA)

In South Australia, Adelaide and key corridors offer good liquidity:

  • Up to 70% gross LVR (metro) for first and second mortgages on strong security

  • Sensible reductions in LVR for fringe or regional areas

For more detail, see:

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Tasmania (TAS)

Tasmania has its own legal and settlement nuances (including no PEXA), which we factor into both structure and timing.

Guidelines:

  • Up to 65% gross LVR (metro) on appropriate security

  • Lower LVRs for more remote locations and specialised assets

For deeper insight, refer to:

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Northern Territory (NT)

The NT has a unique mix of metro (Darwin, Alice Springs) and very remote areas. We generally adopt a conservative approach to ensure a robust exit.

Typical settings:

  • Up to around 65% gross LVR on well-located residential and commercial assets in metro NT

  • Lower maximum LVRs for remote and highly specialised securities

Learn more here:

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Australian Capital Territory (ACT)

The ACT and Canberra region benefit from stable employment and resilient property values.

Indicative framework:

  • Up to 75% gross LVR (metro) on strong residential and commercial security

  • Sensible reductions for fringe or specialised assets

For local insights, see:

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How LVR, Fees and Rates Interact

In private lending, pricing and LVR are directly linked. As LVR increases (especially once you approach maximum figures in a given state), funders will typically:

  • Increase the interest rate

  • Require more conservative terms (shorter loan, staged drawdowns, stricter covenants)

  • Request additional security or a stronger exit strategy

Conversely, if we can structure your facility at a lower gross LVR, this often unlocks:

  • Sharper rates

  • More flexibility around extensions and variations

  • Simpler approval and settlement

To understand how this translates into real pricing, see:

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When a Combined First and Second Mortgage Makes Sense

There are many situations where combining first and second mortgages into a single private facility provides the best outcome:

  • Clean-up refinance: Paying out a bank plus multiple caveats and short-term lenders into one structured facility.

  • Development or construction: Funding land, build costs, and short-term working capital all under one arrangement, with clear milestones and exit.

  • Business sale or restructure: Bridging between business sale, property refinance, and tax obligations without relying on multiple lenders.

For more examples, you can review our case-study content in Deals & Insights and specific scenario blogs such as Second Mortgage Working Capital – Pascoe Vale and Private Loan First Mortgage – Oallen NSW.

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Ready to Check Your LVR and Scenario?

If you want to know whether your deal fits within our LVR and lending scope, the next step is simple:

  1. Review our core product pages:

  2. Explore your state-specific page under Private Lending Australia-Wide.

  3. If you have detailed questions, check our FAQs or read more about what private lending is and how it works.

  4. When you’re ready, submit your scenario or contact us directly:

    • Why Innovate Funding – to understand how we structure deals

    • About Us – learn who is behind the funding

    • Contact – send your scenario straight to the team

We will calculate your true gross LVR, confirm whether the deal sits within our lending scope, and provide an indicative solution tailored to your state, property type and exit strategy.

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