6 East Gippsland News Weekend | September 2024 LENDING LOWDOWN Robert Trewin Trewin Mortgage Broking There is an emerging problem in our society, and it is evident in our schools and preschools. Children are so used to having every moment of their lives filled with stimulating activity that they find it near impossible to sit down and participate in normal everyday activities. This behaviour can look very much like ADHD but is often the result of them becoming dependent on the easy rush of dopamine they are getting elsewhere and so not being stimulated enough by the activities of learning and playing. So how does this come about? Simply by parents wanting their children to be happy and entertained all the time and increasingly using stimulating passive or active means to do this. Activities might include cartoons and television, gaming, toys which make a lot of noise and which they use to fill time, or even eating and drinking sweet things. It was believed that Dopamine gave us pleasure and could make us happy, but more recent studies show that Dopamine actually triggers desire. You can see this easily when you observe someone engaged in an activity they are really getting very little pleasure out of, yet they persist even though there is so little joy in it. Think poker machine players, or even members of your own family scrolling for hours on the phone. Watch them carefully and you will see little enjoyment, but on the other hand try to stop them and see what happens. They will argue and justify the activity no matter what you say to them. If they are children, they may scream and throw a huge tantrum because the desire to Dopamine Detox with Jeff Steedman MINDTALK participate in the activity is so great, even though it is not very enjoyable for them, even adults might tantrum if they believe you are depriving them. Fortunately, we can do something about it, and it is much easier to do when children are young rather than adolescents or adults. Enrich your child’s life with things other than quick fixes that don’t really require them to put in much effort and don’t really benefit them in other ways. Hobbies, art, music, craft and so on are all things which require some effort to produce or participate in and give us something of worth to value when we finish. We can think of these things as positive addictions and when we learn to prefer them as options in our life, we may even replace our dopamine induced dependence altogether. Understanding Loan to Value Ratio (LVR): A key metric in home lending What is LVR? The Loan to Value Ratio (LVR) is a crucial financial metric used in the mortgage lending industry. It is calculated by dividing the loan amount by the value of the property being purchased. The property’s value is determined through a lender’s valuation process, which will consider either the purchase price or the bank’s valuation, whichever is lower. How is LVR used? LVR is a tool used by lenders to assess the risk associated with a loan. Most lenders have specific limits on the LVR they are willing to approve. Generally, many lenders will provide loans to owner-occupiers up to a 90 per cent LVR, with a few extending to 95 per cent LVR. The LVR plays a significant role in determining the lender’s own credit rating. The role of LVR in lending decisions For loans that exceed standard LVR limits, lenders often mitigate their risk by insuring the loan through a Lenders Mortgage Insurance (LMI) policy. Typically, to avoid the additional cost of mortgage insurance, borrowers need to maintain an LVR of 80 per cent or less. Calculating LVR To calculate the LVR, divide the amount you intend to borrow by the property’s value. For example, if you are borrowing $200,000 and the property is valued at $250,000, the LVR would be 80 per cent. LVR, risk and interest rates From a lender’s perspective, a higher LVR represents a higher risk. As a result, loans with higher LVRs are scrutinised more closely during the approval process and typically come with higher interest rates. Conversely, a lower LVR indicates lower risk, which can attract more favourable interest rates. This means that borrowers with a lower LVR are not only more likely to have their loans approved but also stand to benefit from lower borrowing costs over the life of the loan. This article provides an overview of LVR, its importance in mortgage lending, and how it impacts both borrowers and lenders, particularly in terms of risk assessment and interest rates. Authorised by the Victorian Government, 1 Treasury Place, Melbourne POWERING VICTORIA FOR VICTORIANS The SEC is back. To deliver renewable, affordable, reliable energy. Helping reduce energy bills, drive down emissions and create jobs. It’s renewable energy powering Victoria for Victorians. secvictoria.com.au
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