Re:Bad property debt exceeds reserves at largest US banks
by ethbr1 on Tuesday February 20, 2024 @05:35PM
(#39447901)
If you're putting 80% down in the US, I'd suggest the thought process is wrong. With good credit on a good property, 95% LTV isn't uncommon.
Looking at residential property as a forever home is wrong.
You're buying an asset, that happens to also let you not pay rent. Consequently, you want (1) value stability (see earlier qualities) and (2) leverage (as you get to keep all the profits and offset the interest).
80% LTV = 5x leverage of down-payment
95% LTV = 20x leverage of down-payment
Given that your net rate of return should also be against your down-payment, shrinking that substantially boosts effective return at time of sale.
Looking at residential property as a forever home is wrong.
You're buying an asset, that happens to also let you not pay rent. Consequently, you want (1) value stability (see earlier qualities) and (2) leverage (as you get to keep all the profits and offset the interest).
80% LTV = 5x leverage of down-payment
95% LTV = 20x leverage of down-payment
Given that your net rate of return should also be against your down-payment, shrinking that substantially boosts effective return at time of sale.