Hi everyone. I am a newbie to this site and find it very interesting and informative. Have been sitting here in front of the computer now for 2 hours looking over all the posts and found some helpful information. Anyway I do have a couple of investment properties but after reading RDPD have changed my views on some aspects (like negative gearing). I still have a lot to learn and I’m reading…reading…reading. I wanted to ask when a bank lends you the money do they lend 80% of the purchase price (or hopefully you could get up to 90-95%) or is it 80% of the valuation that the assessor is sent out to do. What exactly does LVR mean and how does it factor when trying to obtain a loan. I now agree that you make your money when you buy and is that the advantage in finding a property that values more than the purchase price besides the obvious benefits? Your advise would be appreciated.
Thanks[
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KellieanneHi Kellie, I’m sure someone more knowledgable may give a better answer but I’ll have a go.[
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LVR is Loan to Value Ratio. IE The amount borrowed in relation to the value of the property, usually the purchase price.
From experience I have noticed if it is a PPOR they will usually lend you an amount in relation to the purchase price; unless the valuation comes in a long way under. If it is an IP I’ve noticed the lenders valuation may come in under the purchase price and that is the figure they use to generate the LVR.
A bank will lend you 110% if you have the equity to satisfy their LVR rules. Usually if the LVR is greater than 80% you will have to purchase mortgage insurance (just another cash grab).
Clear as mud hey.[]
Hi Kellie, I’m sure someone more knowledgable may give a better answer but I’ll have a go.[]
LVR is Loan to Value Ratio. IE The amount borrowed in relation to the value of the property, usually the purchase price.
From experience I have noticed if it is a PPOR they will usually lend you an amount in relation to the purchase price; unless the valuation comes in a long way under. If it is an IP I’ve noticed the lenders valuation may come in under the purchase price and that is the figure they use to generate the LVR.
A bank will lend you 110% if you have the equity to satisfy their LVR rules. Usually if the LVR is greater than 80% you will have to purchase mortgage insurance (just another cash grab).
Clear as mud hey.[]Hi ToeEdge,
Thanks for your reply and yes it is as clear as mud (well maybe). Yes you did made sense and thanks for the post.
Kellieanne
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