What LVR% do you aim for?

[azzae89]

Still in the process of saving a deposit for my first IP, but would like to know percentage wise what's a good LVR to aim for.

I've seen different posters say different things on here, such as borrow 105% purchase price and then I've seen 80% and even 90%.

As a general rule when investing (not PPOR), what percentage LVR should I be going for?

Cheers!

 

[Terry_w]

As a general rule when investing (not PPOR), what percentage LVR should I be going for?

Cheers!

For investments 105% without cross collateralising should be aimed for.

If you pay a deposit that means that you are diverting money from a non-deductible loan to deductible which means more tax ends up being paid.

If you don't have a PPOR then you should consider that you may need to buy one or may end up with one. If your money is tied up with an investment this means more non deductible interest will be payable.

If your PPOR is paid off then you might want to still borrow 105% and placing your cash into a 100% offset so that it is available if you want to buy non deductible items such as a new PPOR.

Ideally, if you have equity go for an 80% LVR on the new investment with the other 20% and costs coming from the LOC secured on the PPOR or other investment property.

 

[azzae89]

For investments 105% without cross collateralising should be aimed for.

Could you please define 'cross collateralising' ?

If you don't have a PPOR then you should consider that you may need to buy one or may end up with one. If your money is tied up with an investment this means more non deductible interest will be payable.

I don't have a PPOR. Should I get one only for the sake of saving money on tax? Or would an IP be a better financial decision to start with?

If your PPOR is paid off then you might want to still borrow 105% and placing your cash into a 100% offset so that it is available if you want to buy non deductible items such as a new PPOR.

Not paid off; don't have one.

Ideally, if you have equity go for an 80% LVR on the new investment with the other 20% and costs coming from the LOC secured on the PPOR or other investment property.

No other property to secure against. Would you advise saving a 20% deposit for investment purposes? Or would that only apply to PPOR?

I'm not familiar at all with the tax advantages/disadvantages of a PPOR vs. an IP, so any help there would be greatly appreciated.

Thanks so much for your help Terry!

 

[Terry_w]

Cross Col is using 2 securities for 1 loan.

 

[Brady]

For first IP I would look to go under 90% LVR.

- don't want to tie up all of your savings, leaving extra $$ for further investing
- want to ensure under 90% lvr as above the lmi is quiet expensive
- 90% gives you little bit of room in case of market decrease and change in circumstances

 

[devank]

I personally prefer 80% lvr because:
- no stress if prices drop a bit
- no LMI
- more choice of lenders
- just feels right

 

[Peter_Tersteeg]

The maximum LVR I'd suggest would be 90%. Above this you start to limit your options with lenders and the flexibility to do what you want.

There does come a time where investors get limited to about 80%, but that's further along than most people ever get ("most" being a very broad term).

If I could pick my LVR, it would be 0%. It would be nice to own a bunch of properties and have no debt at all.

 

[Terry_w]

Sometimes it may even be better to look at 89% LVR to bring the LMI down a notch.

 

[Dazz]

What LVR% do you aim for.

I'm aiming for 0% eventually.

What percentage LVR should I be going for?

I don't know your situation well enough to comment.

 

[Rolf Latham]

I dont have a suggestion

for some an LVR if 0 is most appropriate, for others 80 % coz they dont like paying for an LMI premium, for many around 90 %, but for many others, and especially if the loan amount is under 300 k, then 95 % can be a good fit.

What importants here is that one actually has the resources to make an 80 % lend with comfort, rather than say a 90 % paying some lmi but allowing a buffer to be held back

ta
rolf

 

[Rixter]

Aim for total portfolio holdings to be sub 50% for LOE strategy.

Property acquisitions have been 105% borrowings of purchase price with an 80% LVR.

 

[HotRod]

Aim for 80% LVR on the deal, but works out to be about 105% using LoC for the other 20% and 5% for closing costs.

 

[AXXO]

I would look at the lowest LVR you can manage at this time, preferably 80% of less. Try and save your money now, being savings with Mortgage insurance and extra interest payable.

If and when future circumstances change then re-evaluate your position. Changes may have to be made.

It's also advisable to plan your future property investment strategy now, incorporating when your PPOR is to be purchased. This can then indicate what LVR on the IP should be.

 

[Piston Broke]

Zero, what else lol

 

[Shahin_Afarin]

Impossible question to answer - max LVR depends on strategy, risk appetite and loan amount to mention a few.

Do the numbers on a few options and see which works well for your strategy. Also LMI on IP's are tax deductible for the first 5 years.

Regards

Shahin