What's your asset-debt ratio limit?

[Ajax]

My lvr is at 55%. Mortgage insurers rules and lending rules post GFC (no lo docs without accountant's letter or BAS statements or bank statements) has slowed me down.

I probably needed the discipline imposed on me to stop using IP equity like available credit on a giant credit card (even though net equity continued to grow during this time).

If I thought there will be significnt capital gains in the next 3-5 years I would want a higher lvr (more property). Akin to a company having a lazy balance sheet in prosperous times. But I am quite happy with my balance sheet at the moment.

 

[The Y-man]

55% LVR if looking at properties alone.

53% Debt to total assets

Just realised the title of thread - the above are my current levels.

In actual fact, have been well and truly into the 90%+ mark across all assets.

Prior to crashing and burning in the GFC, had gearing structured as follows:
- Property portfolio leveraged 80~90%
- Equity from property used as collateral for margin loan in sharemarket at 60-70%
- Proceeds of share trades funding 100% geared structured products and some treelots.

End result: it hurt to crash and burn!

The Y-man

 

[Rhinsor]

LVR currently mid to high 60's currently refinancing all to 80% to purchase next IP at 80%.

Not including other assets.

I'm happy to go to 90% and have cash for repayments for 9 months if all income ceases.

 

[moridog]

Thanks Pinkboy
I work it out to be about 65% for me. I am just about to take out a new loan but it is my understanding under 80% LVR you don't need mortgage insurance, is that right?

 

[pinkboy]

Thanks Pinkboy
I work it out to be about 65% for me. I am just about to take out a new loan but it is my understanding under 80% LVR you don't need mortgage insurance, is that right?

Correct (in 99% of cases).


pinkboy

 

[MIW]

Actually - I have just realised a slight mathematical conundrum in saying we have LVR 0%.

If one has a $1million property with a $600k loan and has $600k in the offset account, is the LVR:

A: 0% because the loan of $600k is offset by $600k thereby LVR is (600k-600k) / 1mill

OR

B: 37.5% because LVR is (600k) / (1mill + 600k)



The Y-man

Some people on this forum make me laugh, you are so funny, and interesting how you are able to divert your answer.....

 

[Jaggannath]

Currently about 60%... first two purchases were 80%ish, which I paid down to around 50%. Third was at about 60% (based on selling one of the first), and I'm currently working out what my strategy needs to be and finance structures before jumping in

 

[jroth]

About 75% here with some decent buffers in an offset. Taking it easy until the wife returns from maternity leave in January.

 

[knightm]

My lvr is at 55%. Mortgage insurers rules and lending rules post GFC (no lo docs without accountant's letter or BAS statements or bank statements) has slowed me down.

I probably needed the discipline imposed on me to stop using IP equity like available credit on a giant credit card (even though net equity continued to grow during this time).

If I thought there will be significnt capital gains in the next 3-5 years I would want a higher lvr (more property). Akin to a company having a lazy balance sheet in prosperous times. But I am quite happy with my balance sheet at the moment.

Welcome back Ajax! Have you been in the snow here(or nz) or surfing indo all winter?

 

[BayView]

Isnt that terribly inefficient?

I would say no.

It's a nice problem to have no debt and a lot of asset worth....especially if some of the assets provide an income stream.

I like to never go over 80% LVR.

Currently; wouldn't have a clue what our LVR is..

Own a PPoR that hasn't been valued since build date in Dec 2010, an IP I think is worth approx $240k, and a business - which is currently running at well below par for turnover and profit, but still has original debt level to purchase it attached.

 

[Ajax]

Hi Knightm,

I wish i had been skiing in NZ or surfing in Indo. Just working on my day job (immigration law) which now involves some teaching to new agents.

Your question raises an interesting point. I know from past experience if your lvr is at a low level (say 50%) and there are continuing capital gains it is possible to live overseas in a low living cost country for a year or two and have a balance sheet on your return to Australia that looks far better than when you left.

Even better if you start working overseas in a low tax country (such as Hong Kong where very few pay more than 10% tax). Have a set and forget attitude to your IP's in Australia (if you can do this)

You have to weigh this up with how easy it will be for you to adjust to Australia on your return (ability to obtain or generate work, friends, family etc)