Are people still leveraging to 90%?

The biggest problem for serious investors these days is that serviceability wall. Lenders are simply much more conservative than they used to be. The problem with borrowing at higher LVRs is when you approach those serviceability walls, you've got less flexibility to move to lenders that are more generous.

There are plenty of alternatives available when you hit the serviceability walls with mainstream lenders. The only challenge here is if the loan needs to be mortgage insurered, then the insurer becomes the limiting factor not the bank.

If you can build your portfolio to the point where you can work with 80% lending, there are quite a few options in the lending market (more than just Liberty). If you need to borrow more than 80%, once you've hit the limits with the NAB, there's nothing you can do until you either pay down debt or your income increases.

In the future, the secret to building a large portfolio is simple:
1. Don't cross collateralise.
2. Limit the lending on any particular property to 80% of its value.
3. A bunch of other things, but if you don't get the first two right, you're already behind.

 

Thanks for the input guys.

I only have a couple of properties but they are at a point now where I could take each one to 90% and in total I would come up with a 10% deposit for a third. Servicability is good.

So, not a whole lot of equity but enough to buy a property if I go to 90% so there is the reason for the question as I'm deciding to either wait until I'm at 80% or keep buying at 90% which would mean I would have 3 investment properties but all 3 at 90% + LMI.

This doesn't leave me with a huge buffer if something went wrong. On the other hand it would give me another property in line with my buying rules of course, hopefully accelerating my portfolio acquisition phase.

Cheers
GLAM