LVR restrictions when buying off the plans

[nicko54]

I currently own the house I live in and want to buy an investment property. My current LVR is 70/30. I was told the other day that if I buy a new build off the plans I only need to put down 5%. Is that right?

Is this a way to get around the 40% requirement on deposits for investment property?

[MikeC]

To an extent you will be taking a punt that you can afford to settle on the property when it is complete. Depending on how long away that is, you are probably too early to get any form of pre-approval now (these are generally valid for 3 months, and may be able to be extended to 6 months).
You may be able to put down 5 percent now, but if you are going to use a bank to settle when the property is complete, my experience is that you will need another 15 percent of your own money and will be able to get a max 80 percent mortgage. This figure will also depend on your income and the amount of rent you can get for the property (so may be less than 80 percent).
If you are not able to complete the purchase, you may lose your deposit. Probably best to chat to a broker for an indication now, but you would still be taking a gamble.

[Rosco]

Would this be a good investment property?

What would be the cashflow with all expenses included? What happens if interest rates go up? What happens if ring fencing comes in?

Ross