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What does that Jargon mean? We know it so you don't have to

As with any industry, ours is full or Acronyms and Jargon, but what do all those things you hear actually mean?  

We try to keep it really simple so if you catch us dropping one of the below things in to conversation now you'll know what we're waffling on about!

LVR

Probably the most common and one of the most important things you'll hear us talk about.  LVR stands for "Loan to Value Ratio" and put simply it's a way of measuring the equity you have in your house... the amount you own and the amount the bank owns!  This is expressed in a percentage so you'll hear us say "80% LVR" and what that means is the bank lending 80% of the value of your property. 

If your property is worth $100K and your mortgage is $80K, your LVR is 80%.  If you want to work it out yourself simply divide your loan amount by the value of your house and that's your LVR.

GV/RV/CV

This one goes by all manner of different names.  This is the Rating Valuation for your property.  It's the value the council use to approximate what your property is worth.  It's calculated on a broad spectrum so it's an indication but not an accurate way to value your property.  You'll see it on your rates demand letter or on your council website.  This can be used as a "security value" by the bank when calculating your LVR as above.

Security Value

This is the value of the security, or property value that the bank holds for the Mortgage/Home Loan they are providing.  If you have more than one property then it's the sum of those values.  So if you've bought your house for $400K then your security value is $400K (in most cases, although RV etc can change that).  If your loan is $300K then your LVR calculation is simple... 75% 

RV/RVR 

This is a Registered Valuation.  Technically a "Registered Valuers Report" because the valuer is registered, not the valuation itself.  

This is a detailed report on the value of your property and unlike the GV/CV it requires a full inspection of your property with specific details of your property listed and comparable sales in the area noted.  This is the most accurate way of valuing a property and the bank require a Registered Valuation in many cases to ensure they have the correct Security Value and LVR.

​Servicing

This isn't just something you do to your car.  Servicing from a lending perspective relates to your ability to meet the repayments for your loan... your ability to "service" the loan.We might say a loan is marginal because the debt servicing is tight.  Essentially what that means is that the person's income is only just enough to meet their commitments including the new loan.  If the servicing "fails" then it means that the person does not make enough money to borrow the money they want to borrow.  

As always we're happy to elaborate on how these bits of jargon fit with your personal situation and if there's anything else that you've heard that you'd like us to clarify just let us know!

Contact us or flick us an email to office@mymortgage.co.nz

Adam, Claire and the My Mortgage team