LTV

[jamievaughan10]

When you are buying a house, do you want a high LTV or a low LTV?

From what i understand, i high LTV means the bank is lending you most of the value of the house. So for example, if the house is worth 150,000, a high LTV of about 93% or 140,000 would be the mortgage.

Is this correct? If so, what kind of LTV would be ideal? Or does it depend on your long-term goals?

 

[RedlineBrett]

Depends on the risk factor for the property and your long term goals.

Generally speaking, investors want as much cash flow for as little cash down as possible. The rate of return increases dramatically the less you put down, but so does the risk. So selection and management become very important the less $ you put down!

Most of the ones I work with feel two break even properties are better than one that throws off 2-300/mo. But that is a question only you can answer as you must weigh your `sleep at night` factor vs. your desire to be rich!


QUOTE (jamievaughan10 @ Jan 31 2009, 01:01 PM) When you are buying a house, do you want a high LTV or a low LTV?

From what i understand, i high LTV means the bank is lending you most of the value of the house. So for example, if the house is worth 150,000, a high LTV of about 93% or 140,000 would be the mortgage.

Is this correct? If so, what kind of LTV would be ideal? Or does it depend on your long-term goals?

 

[RobMacdonald]

If you mortgage a maximum of 80% ltv, you will avoid paying high ratio insurance premiums. Generally, the amount you put down on a purchase will depend on your long term goals, the cashflow of the property, and whether this is a principle residence or a rental property.

High ratio insurance premiums are higher for a rental vs a residence.

A qualified mortgage broker can help you with the decision and long term planning.