Loan to value ratios

The mortgage industry is a wide, wondrous world with a language all of its own. One of the many acronyms bandied about is ‘LVR’, which stands for ‘Loan to Value Ratio’. Here’s what it means.

When you are working out what amount you can borrow to purchase a property, the size of deposit you need to save, and whether you are eligible for a particular mortgage product, the LVR is one of the most important considerations.

In the simplest terms, the LVR is the percentage of the property’s value, as assessed by the lender that your loan equates to.

So, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is 80% of the property value, making your LVR 80%.

LVR is important because different lenders and loan types have different maximum LVRs and some lenders will only lend up to a certain LVR for small properties or properties in certain areas.

Most lenders will finance 80% LVR, or higher with Lenders Mortgage Insurance (LMI), while low documentation loans may be limited to 60% LVR without LMI.

If you are looking to buy a property get in touch – one of our team can help you find the finance that will work best to help you achieve your goals!

Genworth launches It’s My Home magazine – edition 7

We are excited to share the seventh edition of Genworth’s It’s My Home Magazine.

Genworth’s seventh edition features super straightforward and informative articles covering property inspections, different home loan products and features, and the roles that mortgage brokers, solicitors and conveyancers play when purchasing a property.

Buying a property is a very important decision and we know that it can be both challenging and stressful! It’s My Home is a great resource created by Genworth to help you navigate through the home buying process.

Read the magazine here! 


Steps to a Successful Renovation

Australians are renowned for their obsession with property, in particular renovation and DIY.

A successful renovation can be measured in many different ways, but the most important measure is that the renovation meets your needs, now and in the future. Here are some simple steps to get the most out of your renovation.

Step 1 : Determine your Future Needs:

A successful renovation needs to address not only how you want to live now, but also in the future. Take the time to think about how long you intend to stay in the property and what you need from the property during this time period. For example, a home designed for a young family may not meet the needs ofa teenage family.

Step 2 : List the Features you would like to Change in your Home:

If you are renovating with a partner this is critical to ensure you are on the same page. Your discussions should cover the ‘must do’ repair and replacement items through to the ‘nice to haves’ like decor and furnishings. It is important to list the things you love about your home that you would like to retain.

Step 3: Document your Renovation Goals:

Using the first two steps you will now be able to document your renovation goals. For maximum results this should be broken down to the specific area of the house affected, the existing problem, the new features you want and how you want to use the renovated space.

Step 4 : Find a Reputable Builder:

Talk to your friends who have completed renovations or use a reputable source such as the Housing Industry Association ( Select a builder who is well presented, punctual and reliable in the initial quote stages as this is generally a good indicator of how they will operate once the renovation begins.

Step 5 : Source the Right Finance:

There are many ways you can elect to finance your renovation. Options range from taking out a personal loan or line of credit, refinancing your existing home loan or utilising the equity you have built up in your home. All these options have advantages and disadvantages and the best method will depend on your personal circumstances and your existing financial arrangements.

By following these simple steps you are closer to ensuring that your renovation runs smoothly and results in a home that improves your quality of life now and in the future.

Learning Links

Indigo Finance are very proud to have sponsored Counting for Life through Learning Links at Old Guildford Public School in Term 2, 2016.

This proven 10 week program has provided amazing results for all children, with some children achieving significant improvement in their numeracy.

Children told us that they feel more confident with maths after doing this program and said “Once you start you will be good at maths!”

If you are looking for a charity to get involved with in 2017 please find out more information on Learning Links here:

They have opportunities to sponsor programs and also for volunteers who want to make a difference. Just ask me if you are keen to help!

Are property prices set to drop in the next three years?

Things could be looking up for homebuyers, with a new report forecasting a drop in property prices over the next three years. But could this also signal the end of the Australian property market golden era?

According to BIS Shrapnel’s Residential Property Prospects 2016–2019 report, median house and unit prices in our capital cities will be lower by 2019. This is due to a perfect storm of slower population growth, falling immigration levels and an oversupply of new homes. The Australian Prudential Regulatory Authority’s recent work to tighten lending standards has slowed investor activity, also contributing to the downward trend. Investors have previously been a huge driver of market demand, particularly in Sydney and Melbourne.

How each capital might be affected
In Darwin and Adelaide, median house prices are forecast to drop by two per cent by June 2019. That’s around nine to ten per cent in real terms, given the general rise in the cost of living and wages over that period. Darwin will continue to be affected by oversupply, falling resource sector investment and weak population growth, while Adelaide faces the closure of its Holden factory in 2017.

Surging house prices in Melbourne and Sydney could also slow considerably, with BIS Shrapnel predicting a fall of one per cent in these capital cities.

Perth is expected to be hit hard, as it continues to feel the fallout from the mining boom. Prices in the west coast capital could drop around eight to nine per cent in real terms for houses, with potentially even bigger falls for units.

The strongest performers, according to the report, will be Brisbane, Canberra, and Hobart.

Are apartments at more risk?
Apartments, which are being built at record rates in most capital cities, could be affected more than houses.

According to BIS Shrapnel, 220,000 new dwellings began construction in 2015–16, with a record 49% expected to be multi-unit dwellings. A large number of apartment complexes will be finished in 2017–18, potentially leading to an oversupply, lower rents and a drop in value.

The median unit price over the next three years is expected to drop by eight per cent in Melbourne, five per cent in Sydney and six per cent in Brisbane.

After several years of high property prices and a tough market for new homebuyers, the tide could now be turning – it just might take a few years.

Family…to help or not to help?

Do you have children trying to get into the property market? Are your children wondering if it will ever be possible to buy a property in today’s market?

Outgoing Reserve Bank governor Glenn Stevens stated that the only way for young people to get onto the property ladder in Australia’s most heated market – Sydney – is with the help of their parents.

He’s not alone. A survey we conducted earlier this year found that nearly 30% of parents were worried whether their children would ever be able to buy a home.

Most concerning, in the same survey, 66% of respondents claimed that their biggest financial worry was whether they would have enough money in retirement.

There is a common belief that baby boomers are reaping the rewards of a lifetime of substantial capital growth in the property market. However, they are also the first generation in history to face a ‘third age’ – expected to have approximately 20+ years of healthy life after retirement that requires funding.

What do we do when our children need assistance to get into the property market when as parents we are not in a financial position to help them?

How CAN parents help?

For those parents who are financially able and prepared to help their children enter the property market this financial support may be in the form of:

  • letting the kids live at home longer, in many instances rent free, so they can save a deposit,
  • gifting at least part of the deposit to their children,
  • providing a supplementary loan in addition to the bank loan, typically interest free, or
  • acting as a guarantor (although the drawbacks need to be considered here).

Kids living at home longer

In 2016, more than one third of 18-34 year olds still live with their parents. If the purpose is to allow the adult children to save a deposit then parents need to make sure it happens. Failure to save will place pressure on both parents and children with neither benefiting.

Gifted deposits

Be aware that a ‘gift’ is not repayable. If you are in a position to do this, it’s a great boost for your children. Most banks will require parents to declare there is no need for these funds to be repaid.

Parents on a pension also need to ensure that there are no adverse consequences of gifting.

Supplemental loan

Parents who have available funds today but with future needs may want to consider a supplemental loan to their children at low or no interest. This way you are able to help them NOW but the money will be repaid for your future use.

For any such family arrangement it is always recommended the loan amount and the terms of the arrangement be formalised in a legally binding document.

As an alternative to a loan, parents may choose to buy a home WITH their children. This will give the children a foot on the property ladder while providing the parents with an investment property. In this scenario it is common practice for the parties to be ‘tenants in common’ rather than ‘joint tenants’ and their share of the property be allocated according to serviceability.

Acting as guarantor

Some lenders have a loan product known as a family pledge. Parents or other family members are able to use equity in their own property as additional security. This product is aimed at home buyers and investors who have the ability to repay the loan but lack sufficient funds to meet the deposit and other upfront costs.

Regardless of the preferred option, it is imperative that all family finance scenarios be carefully considered in terms of both current AND future needs of both parties.


If you think you are not or will not be in a position to help your children then we need to talk. We will be able to help assess your ability to start investing now so that you may be in a financial position later to help your children. Securing your financial future first is a step in the right direction.