Hiya
Borrowing more than 80 % LVR dangerous ?
Dunno, here is a contrarian view
Whose risk is it anway ?
One of my favourite canned responses.
Example
Buy a 500 k place with a 100 k deposit, and not a CENT left in the bank
Tommorow u are redundant OR you have the business opprtunity of a life time that costs 60 k to get into............but u only have 24 hrs
Alternate strategy
Borrow 95 % with capped mortgage insurance IO loan, with 100 % offset
Take the 75 k left over and tip it into your offset acct
If that redundancy or that opportunity comes along you are better prepared..........so whose risk is it to borrow more than 80 ??
ta
rolf
Sounds plausible.
How 'bout this; after the redundancy, you are out of work for a couple of weeks, but that's ok; you've got the $75k in the offset.
Then; you fall down the front steps and break a hip, and your leg is fractured in 3 places (happens EVERY day; ask my wife; she's a nurse), you've got no income, and no private health insurance.
The hospital will cover the initial treatments, but then you have 3 - 6 months of physio, which is not covered by Medicare.
You can't work for the first 4 months due to the injuries, and the physio bills start to come in.
Then, your tenant who is in arrears, moves out unexpectedly, breaking the lease and leaves $1500 of damage. Disappears in the night.
The LI covers the shortfall; eventually, but there is the $500 excess to pay as well, and you have no tenant until the damage is repaired, and there is a month of vacancy after the repairs are completed.
Two days after the tenant vamooses, the rates go up another half a percent.
A week later, three houses further up the street, the owner has to sell due to financial stress, and sells it for a song just to cut and run. This basically revalues your home at $420k due to the similarity and proximity of the two houses.
Can't happen? Of course it can.
Maybe a long shot, but my motto is; "expect the best, but prepare for the worst".
Not trying to be all gloom and doom, but there has to be some sense of safety applied to all of this racing to get rich and maximising the LVR etc, because Life does happen.