What is combined LVR?

Combined LVR is the first mortgage balance plus the proposed second, divided by the property value. It is the metric private credit teams use to size second mortgage files. Limits differ by lender, product and security.

Why do private lenders use combined LVR instead of just the second amount?

Because in a forced sale, the first mortgage is paid out first. The second mortgage holder only recovers what is left over after the first plus selling costs. So the lender needs to underwrite the whole position behind the security, not just the second mortgage advance.

Do I need the first mortgage holder to consent?

Almost always yes. Most first mortgage documents contain a clause requiring the first mortgagee's consent before a registered second can be lodged. Consent is usually straightforward and adds one to two weeks to the timeline.

Calculator

Second mortgage borrowing capacity

Quick answer

A second mortgage borrowing capacity calculator shows how much additional debt a property can support behind an existing first mortgage at a combined LVR you choose. On a $1,000,000 property with a $500,000 existing first mortgage, an illustrative 80% combined LVR leaves $300,000 of capacity before costs. The 80% is an example input, not an Archer policy limit. Enter your property value, first mortgage balance and combined LVR below.

Inputs

Property value (AUD)Existing first mortgage balance (AUD)Illustrative combined LVR, not an Archer policy limit (%)

Illustrative additional debt capacity before costs

$400,000

At a 80% combined LVR.

Existing first LVR

53.3%

First balance / value

Total debt at this combined LVR

$1,200,000

Value x combined LVR

Combined LVR with the additional debt

80.0%

(First + additional) / value

Assumptions

Combined LVR is the first mortgage balance plus the additional debt, divided by the property value.
The property value is your estimate. A lender relies on its own valuation.
The combined LVR is the figure you enter. It is illustrative, not an Archer policy limit.

Illustrative estimate only, based on the inputs and assumptions shown. This is not a quote, credit approval or commitment to lend. Actual interest, fees, repayments and terms may differ. Costs not included are listed below.

Costs not included

Lender fees, including establishment and any other fees
Valuation, legal and settlement costs
Government charges and registration fees
Default interest, default fees and enforcement costs
Interest capitalised into the loan, which reduces the capacity shown

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How private credit sizes a second mortgage

The combined position is what matters. Lender adds the existing first balance and the proposed second, divides by the property value, and tests it against its own limit for the security type. Limits differ by lender, product and security.

Why borrowers use a second instead of refinancing

Two patterns. The existing first carries terms worth keeping, a fixed rate locked below variable, an offset facility with a material balance, a long-dated commercial facility on terms the borrower would not get today. Or full refinance would fail current bank serviceability rules even though the equity position is strong. Both point to a second mortgage behind the first. Detail on second mortgage loans.

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