Does overall LVR include PPOR?

Discussion in 'Loans & Mortgage Brokers' started by Jasper, 17th Jun, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Jasper

    Jasper Well-Known Member

    Joined:
    31st May, 2017
    Posts:
    219
    Location:
    VIC
    I'm interested in calculating my overall LVR to see where I stand.

    Do I include my Ppor in this calculation? Why/why not?

    Thanks
     
    Jasper, 17th Jun, 2017
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,629
    Location:
    Gold Coast (Australia Wide)
    depends on what the purpose of the LVR test is for in this instance

    If its for a portfolio guide, then yes, if its to borrow against and the PPOR isnt security - then no

    ta

    rolf
     
    Rolf Latham, 17th Jun, 2017
    #2
  3. Jasper

    Jasper Well-Known Member

    Joined:
    31st May, 2017
    Posts:
    219
    Location:
    VIC
    Hmm, I'm not sure which of your statements my purpose matches.

    I'm trying to make sure that I'm staying on the conservative side and not overextending. I've just purchased another IP, so that's included in this calculation. I assume i won't borrow again for another 2 years or so.

    LVR with PPOR 49%
    LVR without PPOR 77%
     
    Jasper, 17th Jun, 2017
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,629
    Location:
    Gold Coast (Australia Wide)

    Thats all relative to your own risk profile, goals etc

    You are on the lighter side of what APRA would like to see in general I guess, but doesnt make it right or wrong. Some of our clients would not be able to sleep at night with such low LVR exposure :) .

    Much also depends on other liquid resources

    An LVR fo 95 % and an equivalent of cash and equities of 50 % of the portfolio would be ok too.

    LVR, in and of itself is just one measure

    ta

    rolf
     
    Rolf Latham, 17th Jun, 2017
    #4
    Jess Peletier likes this.
  5. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,927
    Location:
    Australia wide
    Sounds pretty conservative overall LVR.
     
    Terry_w, 17th Jun, 2017
    #5
  6. Jasper

    Jasper Well-Known Member

    Joined:
    31st May, 2017
    Posts:
    219
    Location:
    VIC
    Thanks everyone. I'm comfortable now that we aren't overextending too much.
     
    Jasper, 17th Jun, 2017
    #6
  7. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    Overextending can be done at a low lvr. Depends on you debt to income ratio. Now the trick question, does your payg income and ppor debt get included in that calculation?
     
    tobe, 17th Jun, 2017
    #7
  8. Jasper

    Jasper Well-Known Member

    Joined:
    31st May, 2017
    Posts:
    219
    Location:
    VIC
    That's true. I'll try calculate it.

    Just need to check- Debt is easy enough to calculate. But does income include rents received or just purely your job salary?

    Thanks
     
    Jasper, 17th Jun, 2017
    #8
  9. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    That's up to you. The next question is how you work out the repayments? Current rate interest only? Principal and interest? Buffer rate to foresee increased rates?
     
    tobe, 17th Jun, 2017
    #9
    Jasper likes this.
  10. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,684
    Location:
    Perth WA + Buderim Qld
    I agree with Tobe - overextension is measured by the whole scenario, not one factor. An LVR of 10% sounds low, but if the debt is $1M and the income is $20k/yr you're overextended.

    Also, what seems comfortable now could be very uncomfortable in 9 months time, for eg, if a partner were to stop working.
     
    Jess Peletier, 17th Jun, 2017
    #10
    Jasper likes this.
  11. Jasper

    Jasper Well-Known Member

    Joined:
    31st May, 2017
    Posts:
    219
    Location:
    VIC
    Ok. So I calculated the monthly interest only repayments divided by (salary + rent received).
    4000 / 13500 = 30%
     
    Jasper, 17th Jun, 2017
    #11
  12. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    LVR is almost irrelevant in regard to why your asking.

    Income and outgoing and maybe ability to liquidate would be more important IMO
     
    dabbler, 18th Jun, 2017
    #12
Build Passive Income WITHOUT Buyers Agents!

Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia