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I'm looking at a 1 bedroom apartment for an investment, what percentage of the value will I be able to borrow? I don't see the benefit of it is too low to have the property negatively geared.

8 years ago


The most you can borrow is 95% + you can capitalise the LMI with a limited number of lenders.

John. Good morning. Thank you for your question. Whenever I hear of a 1 BR apartment, I immediately think how large is the floor space ?
All lenders will have a restriction on size for smaller apartments. For many it must be greater than 50 sq m, however there are others that will go as low as 40sq m. When calculating the size, you must do this by excluding any balcony or parking areas.
At less than 40 sq m, you would be restricted to an 80% borrowing level. If less than 35 sq m then this becomes a case by case scenario, however you may be able up to borrow at 65%
I am assuming the apartment is not going to be used for student accommodation, because this also has lender restrictions.
Always keep in mind if you already have your own home with good equity, then you could possibly structure the investment debt at 100% plus costs.
Please call me if you would like more information.
Ken Olds
1300 ASK KEN
E. finance@AskKen.com.au

Hi John the loan to value ratio will depend on two main criteria's 1. What is the internal size of the unit? & 2. Is the unit strata or company title?

Confirming what was expressed already. You can borrow to 95% for investment, if that suits your investment strategy of 80% with no LMI costs. There are lenders who lend to 40 sqm but they think the smaller units are a risk - so do your homework. Note also lenders will fund a development to a particular % of the units - a broker can check various lenders to confirm they are OK with the specific unit. Also, there are developments and areas lenders wont lend in - again - this can be checked and it is generally in high density postcodes.

My questions would be around how does this fit in to your life plan. Structuring loans is the second part. Finally get the best asset. I would challenge you around all these areas before even looking at what lenders would consider this.

Hi John,

Good question - I would advise you to look at the following:-
1) Size of the unit as some lenders will not lend against a unit under 50 sqm;
2) Have a look at what the rental market is paying for this type of product in this area - there will be a range;
3) Have a chat with a Mortgage Broker - it is a very important time to chat with a broker as many banks offer different rates and incentives;
4) Is there going to be much vacancy in this market - find out vacancy rate V's unit supply coming online;
5) Can you claim Depreciation on this investment - the newer it is the more you can tax claim / depreciate;

I am happy to advise and to do up an indicative cash-flow if you would like - this will tell you the gearing threshold.

Feel free to contact me if you would like to have a chat and see if I can help further.

Donie Collins
02 9251 5558

Hi John.

Location, apartment size, inclusions (ie full kitchen) and title type may limit LVR or completely exclude some lenders.

The general answer is up to 95% if everything adds up, narrowing right down to 65-70% potentially with a specialist lender paying above market interest rates. Regards Ariel

The most you can borrow is 95% LVR. In some instance with a limited number of lenders they will allow you to capitalise the LMI costs above the 95%. A very good strategy for a savvy investor to maximise taxation benefits.

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