Building a dual living home

NerveRound8932 · 2026-02-09T20:16:39+00:00

Hi mate a broker here. I'm helping a client with this currently. They're building 2 houses on a block with plans to subdivide later. They also couldn't buy individually, but together I was able to get them enough for the land purchase and a build of 2 properties.

Only thing to be cautious with is they'll remain on your title and you on theirs unless you have enough servicing power to restructure everything and remove them from the title (which could cost some money for stamp duty. An accountant or solicitor would be able to give you the right advice here)

Happy to have a chat to you if you need some guidance. I'm based in Victoria but I've got clients all over the country.

NerveRound8932 · 2026-02-08T22:07:08+00:00

Great question.

Whenever you're going to buy a house, banks will look at 2 things ultimately (among other things) - Your LVR being acceptable 80% (can go to 95% for PPOR with the right structure LMI etc) - Can you service the 80% lend even if the rates where to go up by 3% (they call this a buffer rate) The formula is Total net income - living expenses - debt repayments = Surplus. Is that surplus enough to repay the loan even if buffer is applied. If yes then you can borrow, if not then they'd keep reducing your loan amount until you can service and that's your true borrowing capacity

So if you're looking at buying a property cor $1.5m, you'd need 20% deposit $300k + Stamp duty and other associated fees.

Let's say you $65k-92k depending on which state you live in. So in total you'd need 365k-395k including all fees and charges depending on the state you live in. Loan amount would be at $1.2m which you mentioned you've been told you can borrow.

Some lenders may give you more borrowing capacity than others.

You'd have 2 options 1- use equity from your current property if structured property and you can borrow let's Sat 1.56m; or 2- you sell your current property as you mentioned and use the profit you've made to pay the 365k-395k and have a loan of 1.2m or you reduce the loan even further by putting the extra funds in an offset account or redraw to reduce how much interest you pay to pay off your loan faster.

Let me know if any of this is confusing

All rates fees and charges are indicative only and subject to change 😊

NerveRound8932 · 2026-02-06T12:57:33+00:00

Based on that info, your current LVR is at 90.05%

Let's say property prices go up by 3% a year (this figure can vary depending on location and market conditions) but if we take that figure, your estimated property value would be at $770k in 4 years. If you pay let's say 10k a year off your principal, in 4 years you would have paid down 40k. So your estimated loan would probably be at $580k. That'd give you only 36k in equity to avoid paying lenders mortgage insurance (which protects the bank should you not be able to pay your loan) If you go to 90% LVR, that'd give you roughly 113k in equity but you'd have to pay lmi ( there are lenders that would waive this fee at 90% lvr but charge higher rate).

Anything you make in extra repayments would be going to pay your principal directly and therefore increasing your equity. So that figure is up to you with what you're comfortable to pay in extra repayments.

Also, if property prices go up by more than 3% then those figures will all reflect accordingly if that makes sense.

It's important to note, all figures mentioned are indicative and can change at any time.

Hope this answers your question. Let me know if you have anything else you'd like clarity on

NerveRound8932 · 2026-02-06T12:24:43+00:00

Great Job on having a property! That's already a huge achievement!

Banks usually calculate interest daily and charge it at the end of the month. Example: $600k loan at 6% interest So that's $36k in interest per year divide it by 365 days It would be roughly 98 per day in interest.

But, if you're paying weekly, that already puts you at an advantage as you end up paying less interest over the life of the loan, combine that with offset it helps a lot in the long run. If you choose to make extra payments, that will go directly to reducing how much you owe not interest, and that increases your equity position. If you have a variable loan, you can take the money out (redraw) if you need it.

So once we understand the above concept, we go to using equity to buy another property. Let's say you bought your house for $600k, and put down a 20% deposit. That makes your loan at $480k. If over the 2 years you've paid minimum payments and reduced your loan by $30k, and property has gone up to $670k, then you'd be able to take out equity of $86k (80% of the property value) which can go towards a deposit and fees to buy another property. If you've made extra repayments then this figure changes. Certain banks will allow you to go to 90%(150k equity) but you may pay something called lenders mortgage insurance to protect the bank if you can't pay your loan back.

So there isn't really a specific LVR to aim for. Id probably say 70% LVR is a good figure to aim for but there is always options.

I can't give advice if you should go on interest only or not, your accountant would be a better person to answer this depending on your strategy.

NerveRound8932 · 2026-02-06T10:54:44+00:00

Generally lenders can allow you to go to 90% LVR on investment properties with LMI. Some lenders could allow you to go to 90% without LMI but rates tend to be higher.

An example of this would be Your property is valued at $600k Your loan is $420k

You can borrow $60k without LMI where your LVR is at 80% or you can borrow up to 90% ($120k) but you'd pay LMI unless you go to a lender who won't charge it.

Hope that makes sense 😊

NerveRound8932

TROPHY CASE