Warning Signs Your Property Portfolio Is Over‑Geared (And How To Fix It)

You’re probably over‑geared if a 3% rate rise, a vacancy, or a big repair would quickly push you into arrears, eating through your buffer in months, not years. Over‑gearing is less about one big loan and more about fragile cashflow, thin buffers and high LVRs across the portfolio.

Here’s how to spot it this week and de‑risk without blowing up your long‑term plan.

High portfolio‑level LVRs and thin buffers are key signs of over‑gearing.

1. Red flags you’re over‑geared right now

a) Your buffers are measured in weeks, not months

Add up home and investment loan repayments, plus rates, insurance and basic living costs.

If you lost your main income tomorrow, how long would your cash + offsets last?

Red flag: less than 3 months of total repayments, especially if you own two or more properties. A more resilient target is 6–12 months of full holding costs in cash or offset.

b) Your portfolio LVR is quietly creeping above 80–85%

Work out total loans ÷ total property value.

Example: $2.5m portfolio, $2.1m in loans → LVR = 84%.

Red flags:

• Above ~85% across the portfolio; and/or
• Multiple individual properties above 90%, especially if cross‑collateralised.

High LVRs plus rising rates and weaker tax benefits after the 2027 reforms is a rough combination.

c) Stress test: a 3% rate rise breaks your cashflow

APRA expects banks to test new loans at least 3% above the actual rate.

Do the same at portfolio level:

1. Take your current average rate (say 6%).
2. Model 9% on all loans.
3. Keep rents flat and assume no negative gearing benefit.

If you’d go negative by more than you can comfortably cover for 2–3 years, that’s a clear warning. For a worked method, see How to stress-test a geared property portfolio in one evening.

d) You’re living off tax refunds or refinance cashbacks

If your plan is “the tax refund will fix it” or “I’ll just refinance again next year”, you’re already relying on outside rescue.

With negative gearing benefits being restricted for many established properties from 1 July 2027, assuming tax will bail out your cashflow is risky.

e) You feel trapped

Common emotional signs:

• Sleepless nights about rates or vacancies.
• Avoiding looking at statements.
• Feeling you “can’t” sell anything because of tax or ego.

Feeling boxed in is usually a symptom of over‑gearing and poor structure, not just mindset.