16 Jan 2017

3 Factors Affecting the Rule of Two : Part 1

1. Borrowings

This refers to 100 per cent borrowings being $200,000 borrowed from somewhere, whether it be from another house that you have used as security to borrow the equity against to put into this property, or can refer to 80 per cent or 90 per cent or whatever it is that you are using this property as security for.

If that is the formula for a residential property where you are having 100 per cent leverage, anything less than that with a leverage respect (if you have got some savings or other assets that you are moving out of another sphere into this particular property – for example you sell some shares or you have got some savings and you use that as your deposit), the more money you are putting in there and not borrowing, the more positive this is going to be.

We always recommend that you seek professional advice as this blog is for general information only