Hi Michael,

I'm not fired up, sorry if i came accross as agressive. I think this is a good topic to discuss and appreciate your input and point of view, although i disagree with a lot of what you have said. With regard to the comments directed at you, you stated that  "I have neverinterviewed a borrower" I wrongly assumed that yolu were in the business of giving advice to borrowers, I have read some earlier parts of the thread since and it seems you are a journalist, my mistake and i appologise.

Back on topic.

So let's assume a borrower is rebated commission (which a lender just won't do, but a broker might) and the borrower deposits that rebate against their loan (via offset or the loan account itself).

The simple answer to this is that the structure of the loan is often more important than the direct cost. This may not be the case for people with very simple needs, but it is always the case for investors. The small saving they would make frome receiving rebates inc onsiquential if they don't set up their loan properly. I would consider it very unlikely that anyone will get valuable advice from a rebater, brokers who know what they are doing have very little trouble acquiring customers and are very unlikely to agree to paying rebates. This is a point we could argue, but i am in the industry and know a lot of very good brokers, none of them would c onsider rebating commssions, in fact it is more likely that they will start charging additional brokerage.

 Although that may not be important to you, it might be to others, especially when mortgage rebates and offset savings can represent 15% of their actual borrowings.

Lumpling in savings from offset with potential sav ings from commissions is ridiculous in the extreme. I agree savings from offset can be very valuable but trailing commissions are often as low as 0.15% of the loan amount, any rebate is always going to be miniscule compared to the loan size. If a broker is rebating upfronts, there are either going to be very strict  discharge penalties or they won't be around for long, given that the threat of claw backs hangs over their head for a long period after the loan is settled.

And of course finally commission. Regardless of who is collecting the commission  it is the borrower who pays it (if the lender doesn't pass it on to a broker, they call it profit). This never more clear than when a borrower ceases to make loan repayments and trail commission payments also cease.

This just semantics, but it is important, stating that the borrower pays for broker commissions gives the impression that they are paying more because a commission is being paid, this is plainly not the case. Why not include that if a boorrower goes through a branch they are paying the wages of the loan office, credit person, teller, rent on the branch etc.

The difference between  mortgage broking and financial planning comissions is vast. If you go directly through a mortgage broker or bank you get the same charges, rates etc. (so why worry if the broker gets paid, particularly if they give you good advice). 

Many people choose not to use a financial adviser to invrst in managed funds, in suc h cases it is cheaper to use a company such as YourShare, because only an advisor can dial down contribution fees, the fund manager generally won't. Some of them rebate part of the trailing comission they receive also.

I like to make my own investment decisions and use http://www.rebatefinance.com.au for this reason, it is cheaper than going through the fund managers direct. This company also pays its rebates three times a year.  

I'll be really interested to hear Richards comments on the JV idea, sounds messy to me. You can borrow in you SMSF through a "Bare Trust" structure and i would think it is better to keep you super assets seperate from personal assets.

Regards
Alistair

As an investor you will  often need to use different lenders because of the way servicing calculations are made, you need flexibility if you want to maximise your lending potential, hence x-coll is generally something to avoid. In many cases it also adds to the cost of mortgage insurance. I have no idea who the actual lender is in this case, but I would suggest that in the current environment it is best to stick to the banks where possible. 

I've met Neil and heard him speak, he is very knowledgable especially for someone who hasn't been in the game very long and I'm pretty certain he will be successful. I can understand why he has put up this post because it is often difficult to work out what topics are most interesting to different groups of people.

Regards
Alistair

I'm not into seminars personally, but your above statement is just plain dumb. I personally know a number of very successful property investors who got their initial inspiration from going to seminars. How are these people mugs?

Ok, we'll look at your arguments one by one:

1. Interest rates: Long term money market rates have been falling, so it is a general consensus that we are at least near the peak of the interest rate cycle. The effect of interest rates on proiperty prices is overstated in any case, only just over half the dwellings in Australia are mortgaged so there are a lot of people who are not afected at all by changes in rates.

2. Commodities Boom: The RBA expect the current high demand for commodities to continue for "some decades" so I doubt there will be any significant change in the affect this is currently having on the economy.

3. Wage Growth: Low unemployment and continued economic growth will mean that wages continue to grow.

4. Disposable Income: See wage growth.

5. High petrol prices: This will continue to affect outer suburbs but have next to no affect on affluent suburbs, ditto for interest rates (which will likely fall in any case).

There is a shortage of rental accomodation, this will mean that rents keep rising and will support high property prices as will high building costs. 
 
I have no interest in changing yourt mind on anything, I couldn't care less what you think, but please don't say that anything to do with macro economics is clear or simple, professional economists get most of their predictions wrong. There may well be a property crash, though I doubt it, but even if there is your reasoning is flawed.

Read further down, there were something like 550,000 non responses.

"Australia doesn't have a shortage : it's got a massive oversupply."

Absolute and utter garbage!