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What is LVR (Loan to Value Ratio)? – Holly Jones



Ipswich Investor, Investment properties, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, Ipswich Rental Properties, Loan to Value Ratio

LVR is an acronym you’ll see a lot in property news, reports and documents and is used throughout the property industry.

Ipswich Investor, Investment properties, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, Ipswich Rental Properties, Loan to Value Ratio

But what does it mean?

LVR = Loan to Value Ration. 

It’s also seen as LTV Ratio – Loan to Value Ratio.

What is LVR?

LVR is the proportion of money you borrow (loan) compared to the value of the property.

Finance lenders will examine your LVR before agreeing to give you the money needed to purchase your property as a way to assess your risk as a borrower.

The higher your LVR, the most of a risk you are.

Calculating LVR

To calculate your LVR your lender will divide the value of the property (the purchase price) by your deposit to ascertain the the amount of money you need to borrow (the loan value).

eg. If you are buying a property which is $500,000 and you have a $100,000 deposit (20%), you would need to borrow $400,000 and your LVR would be 80%.

400,000 ÷ 500,000 = 0.8

0.8 x 10 = 80, which makes your LVR 80%.

An LVR over 80% usually indicates a deposit under 20%, which most likely means you’ll need to pay extra to secure your loan – this payment is called LMI – Lenders Mortgage Insurance.

High LVR

Home loans with over 80-90% loan to value ratio (LVR) are considered quite dangerous.

The danger with a 90% home loan for a lender is that your monthly repayments and loan terms are higher than they would be if you had a 20% deposit, or more. For this reason LMI is usually charged.

Here are a few things you need to keep in mind if you have a higher LVR:

Guarantor home loans

  • A family member, usually your parents, agree to use their property as a security for your loan.
  • Your guarantor will also be held liable if you default on the loan.
  • If you’re prepared to mix finances and family, make sure you are aware of how you and your guarantor’s financial position can be affected.

Low deposit home loans

  • Most lenders – even the big banks – only require a 5% deposit. But these types of home loans will have bigger repayments because you’re borrowing more.
  • You will also incur LMI and you will be adding more stamp duty costs.
  • A good idea is to also have extra funds to act as an emergency buffer in case interest rates rise again.
  • As a rule of thumb, always prepare for interest rate rises of 2-3%

Long term mortgages

  • Typically, a long-term mortgage is considered to be more than 30 years.
  • May seem appealing because you have lower repayments
  • Reality is you end up paying more because of the length of the mortgage
  • Eg. If you borrowed $400,000 on a 40-year mortgage, you would pay $193,000 extra in interest than you would with the same loan but on a 30-year term (based on a 6% rate).

Whenever you’re borrowing money to purchase or refinance a home, it’s always a good idea to proceed with caution and consider the danger you pose to yourself and your family. Always compare home loans and understand all the pros and cons of the type of mortgage you choose.

Original article published on  by Holly Jones  7/11/2013

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Investment Advice

Superannuation property fund ISPT invests in Brisbane malls





On behalf of its ISPT Retail Property Trust (IRAPT), ISPT is buy a 3741sq m property in Springfield and a 4889sq m neighbourhood centre in Ipswich.

Both were growing areas supported by strong residential catchments, said IRAPT fund manager Cameron Gregson.

“Obviously the quality of the anchor tenants in both centres also was a drawcard for IRAPT,” he said.

The Springfield property comprises of a 3200sq m supermarket leased to Woolworths on a 20-year lease, along with eight specialty retail outlets.

The Ipswich centre, located just 2km from the Ipswich CBD, has a 15-year lease commitment from Coles to open a 4200sq m supermarket in June 2017.

The two properties will be developed by Brisbane private property group Citimark, which has $1.5 billion of diversified development book focused on southeast Queensland.

“IRAPT’s decision to acquire both the Silkstone and Springfield retail centres is a huge show of confidence in these projects and the southwest corridor (of Brisbane),” said Citimark’s director of commercial and retail Jonathan King.

McNab Constructions has been appointed to build the Springfield centre, with completion expected in May 2017, while Hutchinson Builder will build the Ipswich Centre.

Sam Hatcher from JLL and Craig O’Donnell from CBRE managed the sale.


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Investment Advice

Low interest rates cuts negative gearing ATO investor claims in 2012-13



Low interest rates cuts negative gearing ATO investor claims in 2012-13

Low interest rates cuts negative gearing ATO investor claims in 2012-13

Record low interest rates have shown up in new statistics from the Australian Taxation Office, in a sizable drop in negative gearing tax claims by property investors.

Claim for rental properties fell from around $13.8 billion to $12 billion between the 2011-12 and 2012-13 financial years.

The latest statistics for 2012-13 show that 1.26 million people deducted losses made on investments (including mortgage interest) from their overall income, from the 12.7 million lodged individual tax returns.

The overall cost of negatively-geared rental properties has fallen by $2.4 billion, or 31 per cent, in 2012-13, due to record low interest rates and higher rents.

The Tax Office’s latest statistics shows 1.9 million landlords.

The value of rent returned was up 8.6 per cent to $36 billion but the value of interest claimed was down 6.7 per cent to $22 billion.

While the number of landlords with negatively-geared properties increased by almost 60,000, their tax deductions fell 13 per cent.

​The highest number of property investors claiming tax deductions had a taxable income – after tax deductions – of between $37,000 to $80,000 a year.


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Investment Advice

How investor Nautilus nearly doubled money on property in 18 months



How investor Nautilus nearly doubled money on property in 18 months
How investor Nautilus nearly doubled money on property in 18 months

Nautilus purchased this complex of 10 industrial buildings at 93 Burnside Road, Yatala, Brisbane, 18 months ago. Photo: Supplied


Nautilus Investments Corporation has made a 75 per cent gain on the value of an industrial property in less than 18 months after fully leasing half empty buildings and selling them off to Sydney-based fund manager Ringmer Pacific.

The Melbourne-based Nautilus purchased the complex of 10 industrial buildings at 93 Burnside Road Yatala, south of Brisbane from receivers in mid 2013 for $10 million.

It has now sold the asset for $17.45 million reflecting a yield of 8.94 per cent.

Savills’ Callum Stenson and Myles Clentsmith negotiated the deal following an expressions of interest campaign that attracted over 50 buyer enquiries and five offers to purchase.

“This was about being prepared to take on the risk profile,” Mr Stenson said. “When they first bought they were looking for something high return, high risk.”

“The complex was in disarray when Nautilus bought it. It had 57 per cent vacancy, there was outstanding infrastructure charges and no certificate of completion,” he said.

“At the time there was plenty of money but limited confidence – people were sitting on their hands, but those who stepped up have reaped the benefits.”


Nautilus spent 18 months fixing the issues, securing new tenants and presenting the 14,500 square metres property back to the market fully leased.

A similar strategy is now being actively taken up by commercial real estate groups such as Lend Lease’s Australian Prime Property Fund.

That fund snapped up an empty ­Bunnings Warehouse in Brisbane in July last year for $21.27 million and Hills Limited’s headquarters for $15.6 million which is to be vacated next year.

Sydney-based fund manager Ringmer Pacific, which purchased the Nautilus asset, said the property has a prime location.

Ringmer Pacific’s Giles Austin said: “The 93 Burnside Road property provides extremely flexible accommodation for local businesses that will be able to adapt to changing tenant needs in this key growth corridor linking the Gold Coast and Brisbane.”

by Matthew Cranston

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