2@95% or 1@80% ?

[Wirra436]

Hi All.

Not sure if this has been mentioned or asked before.

Scenario:

45k Cash Saved.
Looking to Invest in Positive/Neutral Geared Property.......
Around the 150K-200K Mark.

Would you, buy two houses at a higher LVR rate, with LMI to pay etc.
so around 97% LVR (including LMI) to Increase Properties in portfolio.

Or.... Would you go 1 IP @ 80% LVR or lower ?

Im curious to peoples thoughts which one they would lean towards.
Obviously different variables for everyone, and knowone really enjoys paying LMI, even though its a part of borrowing these days.

Interested in people's thoughts.

Cheers,

Wirra.

 

[Rolf Latham]

Gearing is very much a personal thing

Some like to buy with cash, some borrow 50 % some borrow 8-, some 100 +

There are times where LMI isnt useful - one of these is where you are looking to do a reval soon after purchase - the lmi premium may lock you to a poor val.

t
arolf

 

[D.T.]

What are you trying to achieve?

2x 95 for me every time.

 

[FelixL]

2 x 95 for me as well

 

[Jamie M]

Hi Wirra

It all comes down to your overall strategy and appetite for risk.

At that purchase price, the LMI won't be too ridiculous - but do note that 95% IP lends are becoming harder to obtain. One of the go to lenders I used to use has started credit scoring these apps more harshly.

You'll need to choose your lenders wisely.

Cheers

Jamie

 

[Richard Feynman]

For me personally, 2 x 95%. I'm aggressively acquiring assets. The greater the base, the greater the growth.

 

[Terry_w]

If the properties will grow faster than inflation then it is generally better to get more quickr so that you have a larger asset base gorwing. LMI costs a lot of money but in the long run it will pale into insignificance if the properties keep growing. It is also generally deductible over 5 years.

 

[Aaron_C]

If aggressive, 95%.

 

[nhg]

Personally.

80% first purchase hold onto what you can as buffer
If good deal comes along refinance to 95%
Purchase second at 80 or 95% depending on current savings
Why pay LMI straight up when you can hold onto it for savings

It really comes down to age and risk profile. Though cash is better than lower LVR IMO.

I'm actually somewhat risk averse for a 27 year old. Mine are all at at 70-80% LVR. I'd never go 95% myself. 90% max.

 

[Terry_w]

Personally.

80% first purchase hold onto what you can as buffer
If good deal comes along refinance to 95%
Purchase second at 80 or 95% depending on current savings
Why pay LMI straight up when you can hold onto it for savings

It really comes down to age and risk profile. Though cash is better than lower LVR IMO.

I'm actually somewhat risk averse for a 27 year old. Mine are all at at 70-80% LVR. I'd never go 95% myself. 90% max.

Generally you can only refinance up to 90% LVR

 

[Shahin_Afarin]

Personally.

80% first purchase hold onto what you can as buffer
If good deal comes along refinance to 95%
Purchase second at 80 or 95% depending on current savings
Why pay LMI straight up when you can hold onto it for savings

It really comes down to age and risk profile. Though cash is better than lower LVR IMO.

I'm actually somewhat risk averse for a 27 year old. Mine are all at at 70-80% LVR. I'd never go 95% myself. 90% max.

This is an interesting thought model. I actually think its less risky going for a 95% lend and having more cash in the hand rather than giving up a lot more cash to the bank.

The other point to consider is that just because you can get 95% today doesn't mean you can get it tomorrow. Lenders are slowly pulling back in some shape or form their lending criteria (good example is Suncorp).

I would go 95% any day of the week sub $300k purchase and then 88% or 90% thereafter.

 

[Wirra436]

Thanks for all the input.

I was leaning towards higher LVR lending, as I am trying to obtain more assets in a 5+ year period and expand my asset base and as I am only 30 years old, I feel I can take a higher risk margin.

However recently some banks have pushed back due to thier LMI Company saying no, recently Genworth (CBA) pushed back on a 95% borrowing because I was over the $1Million mark.

So lately 90% seems more achievable.

 

[D.T.]

Thanks for all the input.

I was leaning towards higher LVR lending, as I am trying to obtain more assets in a 5+ year period and expand my asset base and as I am only 30 years old, I feel I can take a higher risk margin.

However recently some banks have pushed back due to thier LMI Company saying no, recently Genworth (CBA) pushed back on a 95% borrowing because I was over the $1Million mark.

So lately 90% seems more achievable.

Stay within dua

 

[Shahin_Afarin]

Thanks for all the input.

I was leaning towards higher LVR lending, as I am trying to obtain more assets in a 5+ year period and expand my asset base and as I am only 30 years old, I feel I can take a higher risk margin.

However recently some banks have pushed back due to thier LMI Company saying no, recently Genworth (CBA) pushed back on a 95% borrowing because I was over the $1Million mark.

So lately 90% seems more achievable.

You will go to satan's playground regardless of the LVR since your borrowings is over $1mil. Sounds like you need to look at another lender.

I think its actually a good thing - Im not a fan of having all your borrowings (particularly $1mil plus) with just one lender.

 

[Shahin_Afarin]

Stay within dua

Hell yeah.

 

[Wirra436]

You will go to satan's playground regardless of the LVR since your borrowings is over $1mil. Sounds like you need to look at another lender.

I think its actually a good thing - Im not a fan of having all your borrowings (particularly $1mil plus) with just one lender.

Yeah I agree, I eventually got the Loan with Another lender who came to the party.

Dua? Dense Urban Area? or Dont Use Acronym's ?

 

[Jamie M]

Yeah I agree, I eventually got the Loan with Another lender who came to the party.

Dua? Dense Urban Area? or Dont Use Acronym's ?

Delegated Underwriting Authority (they sign off on LMI in house).

Cheers

Jamie

 

[mumbai]

You will go to satan's playground regardless of the LVR since your borrowings is over $1mil. Sounds like you need to look at another lender.

I think its actually a good thing - Im not a fan of having all your borrowings (particularly $1mil plus) with just one lender.

Sorry for hijacking this thread, but is there a good reason why borrowings is over $1mil should not be with same lender. I have my ppor $460K and 1st IP $360K with ANZ. I am in process of buying another for $450K and broker is going with ANZ.

 

[Rolf Latham]

Sorry for hijacking this thread, but is there a good reason why borrowings is over $1mil should not be with same lender. I have my ppor $460K and 1st IP $360K with ANZ. I am in process of buying another for $450K and broker is going with ANZ.

Where to start

Concentration risk for the borrower
Higher level of Credit person sign off
if borrowing >80 % LMI DUA issues
xcoll compounds such issues



Upsides

Lower rates
use of the one pro pack fee
Convenience for broker and borrower



1.5ish can be ok if no LMI involved but there is no hard and fast rule

ta
rolf

 

[Terry_w]

Sorry for hijacking this thread, but is there a good reason why borrowings is over $1mil should not be with same lender. I have my ppor $460K and 1st IP $360K with ANZ. I am in process of buying another for $450K and broker is going with ANZ.

If you get into financial diffiucltry ANZ will know...

If you had them spread out you could keep paying 1 bank while defaulting on the others and this may give you some breathing space to enable ou to sell that 1 property with less pressure.