Hi Carlin,

There is no problem with choosing not to use a broker, but your reasoning is floored. Most non bank lenders get their funds from the same source. Hence there is no real difference between products and especially not lending policies. A good example is Virgin Money, which is a cut down, rebadged Mac Bank product, Virgin Money loan officers sit right next to the Mac Bank staff in the same office. For the most part investors are best off using banks, to avoid exposure to mortgage insurers, pretty much all brokers have access to all banks (except Bank of Queensland).

The issue you are going to hit, is that to max out your servicing in terms of full doc loans, you will almost definately need to use more than one bank, to work out which ones suit your situation best you need an intimate knowledge of how each lender calculates your servicing capacity. Only a good broker will be able assist you with this.

Regards
Alistair

The circomstances for cash flow loan is an advantage is where liquid funds are tight.  Cash flow loans allow for reduced contribution and provide some gearing advantage by adding further interest capitalisation for legitimate tax claims. 
The disadvantage compared to Terry's proposal is that cash flow loans do not allow for a starting LVR higher than 80% of the property value.  The capitalised interest is allowed to increase upt ot 90% over 5 years.

This is a roundabout way of stating there is no advantage. The cashflow loan is expensive, inflexible and does nothing that can't be acheived with regular lending products at significantly lower cost. It really annoys me as it seems to simply be a way of selling people an overpriced loan.

Regards
Alistair

Hi Adam,

Do you needd to raise the funds personlly, or can it be through the business. If you can raise it through the business there are a large number of different sorts of loan that might suit you. In terms of LVRT agains tthe purchase of another business, typically you can borrow 50% of the amount, but the actual LVR would be heavily dependent on cashflow of the subject business and your current business.

Regards
Alistair

"They do offer greater flexibility in many cases as they don't suffer from the beaurocratic straight jacket that the big banks often operate under"

Hi Steven,

I'll be the first to admit that I know nothing about your business and you might be great. But generally with small secuitised lenders the funds come from one of very few wholesale funders, and all loans are mortgage insured, in most cases through one of the 2 major mortgage insurers. Hence, there is often very little difference between their credit policies or service levels, they simply have no control over them. I have come accross very few securitised lender that are worth using, and no small ones. If you are different please let us know, if you do have a point of difference in your offering I'm sure you will do well from sticking around here.

Regards
Alistair

"This could go back and forward for ages …. Gerry Harvey became a billionaire by attracting people with cashback and discounting … 80% of brokers IMHO have trouble reconciling … their own credit card …"

I think its a worthwhile argument, but I also think we've both made our points, so i'm happy to leave it here. But i will add that Harvey Norman is not a discounter, they compete by offereing variety and also because they are very good at choosing stock that will sell (Gerry Harvey is an absolutely brilliant retailer).

I think its more like 95% by the way. I had a BDM tell me recently that a broker called her to ask what LVR means! Having said that, it is quite obvious that all the brokers that come on here know their stuff, if they didn't they would soon be shouted down.

Regards
Alistair

"I do agree with Margaret Lomas' rants about LOC rather than taking out a standard mortgage with offset of interest option..this in order to be able to access any gained equity easier."

LOC's have uses, but typically you are better off with standard loans as they are less expensive. It is no more difficult to top up a standard interest only loan than to extend the limit on a LOC. For a PPOR a loan with offset is far superior to an LOC, not only because it is less expensive, but also because using the offset does not alter the balance of the loan therefore avoiding any issues with the mixing the deductable and non deductable debt.

Hi Marc,

To start with, it is costing you money as LOC's are more expensive than standard loans. They also provide less flexability than a loan with an offset. With a loan balance of only $600K, it is not costing you a great deal of money, but it is still not optimum. My argument re Destiny is that they seem to have a blanket policy that crossed loans and LOC's are the way to go, the simple fact is that this is rarely the best structure.

I have a number of clients who have read her books and have had to discuss with them why I didn't think they should structure their loans as per her advice, I have also heard her speak a number of times and have been quite unimpressed. She seems to think buying properties without seeing them is a good thing, for example, I would not consider this good advice. Nor would I consider buying in some of the areas I have heard her spruik eg Elizabeth. I would not consider an investment in such an area low risk.
 

Hi Debra,

If you are using lo docs please, for your own sake, don't cross your loans. It will cost you significantly in terms of mortgage insurance.

Regards
Alistair

The purchasers will be paying the GST when you sell, not you.

Yes, there are a few ways you can acheive that, subject to your income. Which is best would depend on your personal circumstances. Give us some more info.

Regards
Alistair