What is LVR for a bridging loan?
LVR (Loan-to-Value Ratio) is the loan amount divided by the property value, expressed as a percentage. Bridging lenders typically cap LVR at 65-75% on residential security, calculated on as-is value (existing property) or GRV (gross realisation value, for development).
Definition
Loan-to-Value Ratio (LVR)
The percentage of a property's value that a lender will advance. A $700,000 loan against a $1,000,000 property is an LVR of 70%.
The two LVRs you need to know
| Metric | As-Is Value | Gross Realisation Value (GRV) |
|---|---|---|
| What it measures | Current market value, today | Estimated value once a project is complete |
| When it's used | Standard bridging, settlement bridging | Development finance, construction loans |
| Typical cap | 65-75% | 60-65% |
| Valuation type | Sworn valuation or desktop | Independent feasibility + valuation |
Why bridging LVRs are lower than bank mortgages
Banks regularly lend up to 80-90% on owner-occupied homes because they rely on long-term serviceability. Bridging lenders rely on the property sale or refinance event, so they need a buffer for selling costs, agent fees, market shifts, and any holding period interest. That buffer is the gap between LVR and 100%.
How cross-collateral can boost your borrowing
If your single property security caps you at 70% LVR, adding a second property as cross-collateral can effectively unlock more capital. We regularly structure bridging loans across two or three Melbourne properties — for example a Toorak home plus a Brighton investment property — to fund a larger purchase or development.
See our development finance page for how cross-collateral works on staged builds, or read about development finance basics.
Worked example — $2M purchase
- Target purchase: $2,000,000 in Hawthorn
- Existing security: $3,500,000 unencumbered home in Malvern
- Maximum LVR: 70% × $3.5M = $2,450,000 borrowing capacity
- Loan structured: $2,000,000 + ~$80,000 stamp duty + costs
- Effective LVR on combined security: ~38% — a comfortable position for the lender.
What reduces your LVR cap
- Specialist or unusual property types (rural, hobby farms, off-the-plan)
- Postcodes outside major metro areas
- Weak or unproven exit strategy
- Existing arrears or recent defaults on credit file
People Also Ask
Usually yes — most bridging lenders capitalise costs into the loan, calculated against the security value. So a 70% LVR cap means total funds advanced (purchase + duty + fees) cannot exceed 70% of security value.
Rarely, and usually only on prime metro residential security with a signed unconditional sale contract on the existing home. Most bridging deals settle at 65-72% LVR.
Discuss your LVR →GRV (Gross Realisation Value) is the total estimated sale value of all units in a development — the gross. On-completion value can refer to the same number or to a single dwelling's finished value. Always clarify which the lender means.
Where this applies in Melbourne
See how this strategy plays out in the suburbs where we most often arrange this kind of finance.
Related insights
Bridging Loans vs Caveat Loans: Which Is Right for You?
Both are short-term, both are fast — but they secure differently and suit different exit strategies. Here's how to choose.
Winning a Toorak Auction: A Finance Playbook
Toorak moves fast. Pre-approved bridging finance is the difference between bidding with confidence and walking away.
Settlement Gap Survival Guide for Melbourne Property Owners
When your sale settles after your purchase, settlement bridging keeps the deal alive without panic refinancing.