90% and 95% LVR

Discussion in 'Loans & Mortgage Brokers' started by The Grinch, 20th Mar, 2020.

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  1. The Grinch

    The Grinch Well-Known Member

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    Had a few question in regards to these so hoping someone could provide some insight.

    Saying we could afford to hold would it ever be advisable to purchase with a 90% LVR. Obviously it does turn properties that were originally postive or neutral to a negative gear however we would be able to make 2 more IP purchases with these loans then if we went a 80% LVR.

    Any advice, pros and cons of these as well as anyone who has ever borrowed at these would be greatly appreciated.

    Cheers
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not enuff info, but in a growth market - yes

    ta
    rolf
     
  3. The Grinch

    The Grinch Well-Known Member

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    We are looking to aggressively purchase as many properties as we can over the next 2-3 years as with our current roles we are stable and earn quite enough to service up to 10k-20k a year if required although we would look at slowly balancing these out through the portfolio.

    We plan on borrowing until we reach capacity and then look at paying down the mortgages to a 60% LVR before we go again and access some equity,hopefully by the time we are ready to go again.
     
  4. The Grinch

    The Grinch Well-Known Member

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    Of course we would be open to other suggestions on how to best aquire as many properties as possible or better stratedgies for growing a large portfolio. Understand we may not need to pay down all the mortgages or may not pay them down at all as we would be using an offset account once we have reached capacity and looking at any renivarions or value adds that we can during this time.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Which will run out first? Deposits/equity or serviceability?
     
  6. The Grinch

    The Grinch Well-Known Member

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    Really depends how we structure our portfolio and what we buy. Equity would run out first as if we structure the portfolio to be close to neutral serviceability won't be an issue.

    Deposits will also become harder once we do have kids and one of us will need to stop working for sometime.
     
  7. Hetty

    Hetty Well-Known Member

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    Sounds risky.

    I reckon @spludgey will have some insight here
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    If you were to run out of serviceability before deposits or equity from growth paying lmi would be a waste of money
     
  9. Lindsay_W

    Lindsay_W Well-Known Member

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    I think you mean serviceability would become harder?
     
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  10. The Grinch

    The Grinch Well-Known Member

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    Well on my wage Id be able to pay up to 20k a year covering costs if needed however the focus would be to keep the portfolio close to neautral and utilize that 20k to mitigate risk for vacancy rates, repairs etc.

    Deposits would slow down as coming up with 50k-80k for another deposit would take a lot longer than it currently takes if that makes sense. If it was just me working I'd only have access to say the ability to save 50k-60k on top of our livings and I'd like to keep a portion of that in savings and offsets and delegate 20k of that towards any property requirments.
     
  11. The Grinch

    The Grinch Well-Known Member

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    Just to add we don't plan on having kids for the next 4-5 years. So in terms of serviceability we won't have any issues as my partner earns similiar to me so we would have quite some additional monies available.
     
  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    My prediction. 80% lvr + stop. Vals will drop. Servicing calcs will blow out. Income tests will be harder. Won't be factual but the gap between fear and reality becomes more real. wait untill auction withdrawals slump and short term data stops. Yes it's not real but it will b for now
     
  13. Lindsay_W

    Lindsay_W Well-Known Member

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    Your borrowing capacity is gonna be hammered when you do have kids and wife no longer earning an income, you could have the deposit but this hardly helps when getting the finance is gonna be much harder.
    So if you plan to do all the buying in the next 2 -3 years you should be ok - just remember that just because your portfolio may be positive or neutrally geared (in real terms) it's not how the banks servicing calcs will see it - so it's a good idea to try to map out the finance side of things first. Order of lenders to use is important, some brokers on this site specialise in that kinda thing.
     
    Last edited: 22nd Mar, 2020
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  14. The Grinch

    The Grinch Well-Known Member

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    Perfect, just what I was interested in knowing. Won't be looking to purchase anymore while the missus is off work unless we have the equity to do so. Will be more interested in enjoying life and adding value in the form of renovations during this phase of life.

    Will be reaching out to brokers over the next few weeks to see if I can find someone who fits within This. Any recommendations?