LVRs Under Review by the RBNZ

[AlFa]

off topic post

[Damap]

Sorry Alfa try again now :-)

[Nextmove]

Thanks for your advice Damap - much appreciated

[freeloader]

Lvr

Hi pt. My banks currently require lvr 70%. Can I get better? Can you provide details of your lender?

[Nick G]

Where is the property and where do you live?

[Anthonyacat]

All 'banks' require 70% LVR in Auckland, 80% elsewhere.

Non bank lenders (Resimac, etc) don't have to listen to the LVR rules, but charge higher interest rates.

[Stevegoodey]

I don't mean to come across like I'm marketing and stuff but I'm actually running a webinar tonight covering this issue.

Check out the Property Tutors Facebook page for a free login, it starts at 7.30pm tonight.

[brokerman]

For Auckland all Banks limited to 70% on a standalone, if other property in the mix then cross charging can occur which may help. If standalone then non Banks can assist and my take is this. At 80% they would charge say 5.15% for two years as opposed to a trading Bank at 70% charging 4.25% which you can't have at 80% so it's irrelevant really. Per $100,000 borrowed the 'higher' rate is $900 a year more expensive, not a lot especially if it means you can buy now and take advantage of capital gains over the next few years. There are also 90% funds available closer to 6%, only a few of us have access to these. Hope that helps!

[Frezzinghot]

LVR percentages - What is a safe level

Hi All,

I have a current portfolio LVR of 63% across 3 tenancies, not looking to add to this yet as I am trading but wanted to know what would you all consider a safe level in the current market, especially now that all banks are looking for 40% deposits.

Cashflow is good at present so should I just sit and wait, also plenty of equity in PPOR so no pressure there either.

FH

[Grads]

Under 50% LVR is now a 'safe' level I want to be..

[Bobsyouruncle]

We should all be 50% max FH in this market.

[Don't believe the Hype]

We should all be 50% max FH in this market.

50% LVR is a good idea for Auckland investors... Outside Auckland you can afford to be at a higher level for 2 reasons
i) Prices haven't rocketed so high
ii) Cash flow tends to be better

[Bobsyouruncle]

Agree Hype

[Frezzinghot]

Our accountant says pay down PPOR debt first with trading $$, then rentals.

FH

[Don't believe the Hype]

Our accountant says pay down PPOR debt first with trading $$, then rentals.

FH

Your accountant would say that as the debt on the PPOR is not tax effective. You need to not only consider the tax effectiveness of paying down debt but the opportunity cost of doing so.

While that debt if you're in the highest tax bracket will save you 33% is meaning you're not getting a 33% refund if the debt was sitting against an investment.

Consider your tax rate and what you might otherwise use the funds for - if you get a better return elsewhere don't pay down PPOR.