LVR calculations - how to do it on a second property?

Viewing 5 posts - 1 through 5 (of 5 total)

Bronte
Participant
@bronte
Join Date: 2007
Post Count: 41
October 17, 2009 - 10:56 pm
Hi!
Yes, we are slow in the country!
I want to work out an LVR by adding a 2nd property to an existing mortgage – but am uncertain about where the cash deposit fits into the equation.
For example:
I have one property valued at 440k.
I want to purchase a 2nd property valued at 524k.
My mortgage on the 1st property stands at 378k.
That means (*I think*):
Valuations of 440k + 524k = 964k.
Borrowing required 378k + 524k + 19k stamp duty= 921k
My cash deposit is 40k…….
Hmmmmm…..I can't complete the equation and I can't find an online LVR that can help me.
Thanks!
B x
investor Nicholas
Participant
@investor-nicholas
Join Date: 2009
Post Count: 8
October 17, 2009 - 11:31 pm
Hi Bronte,
I'm a little unsure about what your after however is this right?:
Your PPR is currently at 86% LVR.
You want to buy another property for 524k and borrow the whole amount
You have 40k cash to help with costs.
If you borrow 95% of the cost of the new place (from a different bank), your 40k will go most of the way to cover LMI and stamp duty. If you intend on borrowing on your limited equity you will also have to pay LMI on your current mortgage.
I hope this helps
Bronte
Participant
@bronte
Join Date: 2007
Post Count: 41
October 17, 2009 - 11:45 pm
Thanks Nicholas:
That does help….
I am also trying to plot out how the LVR formula works – step by step – so I can run various scenarios and work out what comes in below the need for LMI…..
B x
investor Nicholas
Participant
@investor-nicholas
Join Date: 2009
Post Count: 8
October 17, 2009 - 11:57 pm
Hi Bronte, your bank will value your property and lend according to their valuation. If you intend to borrow more than 80% of the value you will have to pay LMI. From what I understand most lenders will only lend as much as 95% of the property value.
If you go with another bank for the second property, the new bank will only assess the value of the new property and you will pay LMI accordingly.
duckster
Participant
@duckster
Join Date: 2004
Post Count: 1,674
October 18, 2009 - 4:19 am
Bronte wrote:
Hi!
I want to work out an LVR by adding a 2nd property to an existing mortgage – but am uncertain about where the cash deposit fits into the equation.
For example:
I have one property valued at 440k.
I want to purchase a 2nd property valued at 524k.
My mortgage on the 1st property stands at 378k.
That means (*I think*):
Valuations of 440k + 524k = 964k.
Borrowing required 378k + 524k + 19k stamp duty= 921k
My cash deposit is 40k…….
Hmmmmm…..I can't complete the equation and I can't find an online LVR that can help me.
B x
Hope this is what you are seeking Good luck with the Calculations !
Based on your 40 k deposit being eaten up by stamp duty and mortgage insurance.
LVR = Loan to Valuation Ratio
LVR = Loan / Valuation (this is what ratio means something divided by something else)
Total Loan = 378k + 524k =   902k
Total Value = 964k
LVR = total loan / total Value * 100 (Multiplied by 100 to get a percentage figure)
LVR = 902k / 964k *100
LVR = 93.56%
Lets now assume that you borrowed the stamp duty and no mortgage insurance was needed
LVR = Loan to Valuation Ratio
LVR = Loan / Valuation (this is what ratio means something divided by something else)
Total Loan = 378k + 524k +19k =   921k
Total Value = 964k
Now 40k used as deposit !
Then the loan is going to be 40k less ! (assuming no LMI)
Total Loan = 378k + 524k +19k =   921k – 40k
Total Loan = 881k
LVR = total loan / total Value * 100 (Multiplied by 100 to get a percentage figure)
LVR = 881k / 964k *100
LVR = 91.39%
As LVR is > 80% you are going to have to pay LMI so your 40k deposit could be paying for this cost,
so this LVR won't happen but I have shown in case you were wondering how to work it out or if it would work out to be < 80 LVR and hence avoiding LMI.
Lets now assume that you borrowed the stamp duty and mortgage insurance needed (based on a $27,000 LMI)
LVR = Loan to Valuation Ratio
LVR = Loan / Valuation (this is what ratio means something divided by something else)
Total Loan = 378k + 524k +19k +27k =   948k
Total Value = 964k
Now 40k used as deposit !
Then the loan is going to be 40k less !
Total Loan = 378k + 524k +19k +27k – 40k
Total Loan = 908k
LVR = total loan / total Value * 100 (Multiplied by 100 to get a percentage figure)
LVR = 908k / 964k *100
LVR = 94.19%
As LVR is > 80% you are going to have to pay LMI so your 40k deposit could be paying for this cost,
LMI figure based on total loan of 948k
used http://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-calculator/ to get 27k guestimate however some lenders had as high as 34k LMI.