lvr question

[phm]

Hi there.

I have a hypothetical question that I hope someone can answer.

If I had a good income, a PPOR paid off, a loan with lender A for $20000 and wanted to borrow 95% say, with another lender, and not use the other two properties as collateral, just the new IP, then am I right in thinking that the LVR of the first two properties would not be used in the lenders calculations on the new loan?

 

[Lotana]

Phm,

LVR stands for "loan to value ratio" and is calculated for each separate loan as the maximum amount you can borrow divided by the current value of the security for this loan (by the last valuation or the purchase price). Therefore if you set up a loan using just an IP as a security and borrowing 95% of the purchase price, the loan's LVR is 95%. Your other loans may have different LVRs. In summary, LVR is attributed to a loan, not the borrower.

Say cheese

Lotana

 

[Rolf Latham]

Hi PHM

The loan would be stand alone if you tip in a "cash" deposit of 5 %.

If you are using non cash equity, and offering a second mortgage as security then the LVR of the the second property and your new one will be combined.

Ta

Rolf