Forum Replies Created
I don't know a whole lot either, but I assume if you plan to "sell it in a few months" then you will want to pay as little capital gains tax as possible, thus you might be tempted to call it your PPOR and be exempt from capital gains tax.
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Mike, Terry,
Thanks for the detailed answers, I'm still a little confused however…
"There is a way to know how much the value is worth before committing. You can order you own independent valuation, then sign contract subject to bank finance and then wait for the banks valuation before deciding. or skip your own val and just use the bank's. It may cost you a bit more, but could end up saving you overpaying for a property."
If the bank's policy is not to disclose their valuation to you, does their final valuation figure appear on your mortgage contract at the time of signing? I.e is the policy that banks have not to give out copies of the valuation, or not to disclose the valuation figure to you?
Cheers
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Not sure if you've tried http://www.buymyplace.com.au/ ?
I hear it advertised on the radio all the time, haven't had a good look at it myself though.
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Thanks Terry and Richard,
Are there any online websites that have a complete list of all Australian lenders who currently offer 100% fully transactional offset accounts?
I’m finding that going to each individual website is useless, and it is sometimes extremely hard to sort the advertising junk from the hard facts of the loan (i.e me previously believing CBA’s MISA was just like any other offset account…)
Richard, thanks for the ’10 reasons why you dont cross collateralise your loans’ document, it was a great read! You’re a brilliant guy offering these services to people for free…
Cheers,
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As a first property, with the aim of eventually turning it into an IP, would you recommend going with one of the big 4 and opting to use their offset account? Or is it still more cost effective to go with a smaller lender with a better interest rate, which may not have the 100% offset account associated with it?
I assume the offset account only really becomes important when you convert the PPOR into an IP, i.e is the offset account's sole purpose to reduce the non-deductible interest payable when the property is your PPOR, but to maximise the dedictible interest when you take the money out and use it as a deposit on your second PPOR?
Any clarification if this is not correct is greatly appreciated.
Cheers
Oh really? That’s a surprise, they really ‘sold it’ by claiming it was 100%…
What are the significant shortcomings?
Is it possible to have your offset account through a different institution to your loan, or are they always a package deal?
Of the big 4 banks (for comparison sake only) Do ANY of them have a fully transactional offset account?
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Is there a limited number of years you can hold an IO loan?
I was playing around with the CBA online calculator tools, and the longest time you could specify was 10 years of IO on a 30 year PI loan… Is this correct? If so, is it difficult to refinance after 10 years to have another interest only period?
Also, is CBAs MISA account attached to the IO loan, or are these completely separate 'accounts' ? i.e if we had a $300k IO loan with a MISA attached, and after 5 years had $200k in the MISA (hence only paying interest on $100k balance?) … If we then used this $200k to buy a second PPR, and converted the first into an IP, is the original IO loan still $300k and completely deductible if negatively geared?
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anyone?
…or is this topic not supposed to be in the help needed section (possibly value adding??)
Thanks,
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Hi quickchick, GOM, Mick and Richard,
Thanks for the clarification! My wife and I really appreciate all of your advice.
I look forward to asking you some more questions soon (most likely straight after I meet with our accountant and financial planner!)
Cheers,
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Hi Richard, Mick and GOM,
Thanks for the further advice. The trust idea is sounding better and better…
Apart from the setup cost and tax-return costs are there any additional costs involved with holding a family trust? And how does it work exactly, i.e do I arrange for my employer and my wife's employer to pay our salaries into the trust (and are they usually happy to do this)? or do we put money into the trust and then redistribute it afterwards… Also are we taxed on our true personal incomes, or the incomes we draw from the trust?
If we plan to take an interest-only loan with 100% offset, and rent out the property in about 5 years, does it make more sense to put the property in my name of my wife's name or both? I assume if it is negatively geared my name is better for tax, and if positively geared then my wife's name (since she won't be earning income at that stage, except if drawn from the trust…)sorry, this was pretty much answered by quickchick above.I have arranged to meet with my accountant and a financial planner (family friend) next week, can you think of anything worth discussing with them (apart from the above) given my individual circumstances?
Thanks again,
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Hi Richard, QuickChick and Mick.
Thanks for the advice and guidance. I think I will buy this one without using a trust, and wait until I’m earning more money to buy the next one with a trust.
Without a trust, will it make any difference if I buy the property in just my name or both me and my wifes names? I think it is necessary to get the loan with both our names for it to be approved financially…
Thanks again, it’s great to hear other people’s opinion!
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Hi Richard,
I am very keen to set up a family trust, however I know don't know enough about them to actually do it. Is a financial planner the best person to talk to about setting one up? Or can I set one up at the same time as I take out the mortgage?
Also I planned to take out an interest only loan with an offset account, however when I come to buy my second property and use the capital in my offset account I assume my first property would then become negatively geared? (not sure if this is correct)
What will this negative gearing mean in terms of the family trust? i.e you mentioned that it is a good idea to set one up for neutral or positive geared properties…
Thanks,
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Hi Richard,
Thanks for the response!
What do you mean ‘if you get it wrong it will be expensive’? I.e will it be expensive to add/remove one of our names from the contract and mortgage?
Some more information:
We plan to rent it out after 5 years, and at this time I will be earning about 20% more than now, and my wife will not be working.
Someone mentioned that for investment and tax purposes it may be better to put the property in my wife’s name… what are your thoughts on this comment?
Cheers,
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