Ideal LVR for new PPOR & possible conversion to IP in future?

What is the ideal LVR for a PPOR purchase with possible future conversion to an investment property? I feel like I read somewhere that the answer is 80% LVR + offset, but I can't find where I read this...

Idea is to reside in the PPOR initially, 2 years minimum, with the potential to convert to IP in the future if things go well.

I could go to a lower LVR (higher deposit), but don't want to if it's a not good idea in this case. With 80% LVR I have a decent offset amount.

 

I'd be inclined to hold back as much savings as possible (depending on what you intend on doing with your savings).

Would you be upgrading to another PPOR in 2 years?

 

the ideal would be 105% - don't use any cash.
Whether achievable or not will depend on the circumstances.
Tax Tip 61: How to borrow 105% on your first purchase Tax Tip 61: How to borrow 105% on your first purchase

 

Fair enough. It depends on my circumstances - I can't say for sure yet. It will depend on how much extra cash I can save, job promotions, the real estate market etc.

I am not comfortable with anything less than 80% LVR, but thank you for contributing to the thread.

 

Actually, the reason I ask, is I am trying to work out the formula.... ! If I understand it fully I will change my view.

I found this page (Should I pay down my mortgage or use an offset account? - Money School), and am experimenting with the calculator they provide.

The bit I understand in theory, is that having an offset and paying extra or more often will reduce interest paid.. makes sense.

The bit which blows my mind, is that based on that calculator, if I put in a smaller deposit (20% + larger offset), but pay the loan off faster (fortnightly), I will pay less interest than if I put in a 40% deposit (+ smaller offset) and pay off the loan equally fast....

 

If you put money in a 100% offset account, and kept it there, it will save exactly the same amount of interest as if you put it in the loan.