Forum Replies Created
Nice come back number 8 however not everyone wants to keep buying. Everyone has different goals. Once you’ve paid down personal debt their is nothing wrong with amortising investment loans.
number 8 wrote:You may be missing my point?P&I should never be used, hence there is no need to ask the question – I am a Broker an Planner and I do not want to know what banks have the policy that you are describing. All my clients are I/O. If the bank doesn,t allow this, then take your business to another who will. There are many options when you think like the masses, but when you calculate the numbers for what they are, you have limited choices. It is very simple when you know where to look?
Number 8 – how can you say P&I should never be used?
Planners should be working towards the clients goals not their own ideals. Some people may want to reduce their level of gearing as they get older – especially if they have strong incomes. I have a client who has no personal debt and refuses to have investment loans with terms longer than 10 years. Half of his titles are in a safe at his house and he has a company returning him 750k p/a. If you told him he had to keep his debts interest only he would laugh you out of the room.
Richard – don’t think they are looking to borrow in the trust . The borrowing is in his name and the business operates through a trust… E.g it is where the income is.
Sarah – without disclosing details can you tell us what the business does?
I will be the first to put up my hand and say these deals confuse me a bit. Banks accept declarations in some cases up to 80% of turnover from bas statements. Then lend 80% on low doc. If you not a rating 1 or 2 client in terms of risk grade banks still accept 40% of turnover as a declaration. It is only a few like liberty that actually calulate the TO less wages and general expenses etc when looking at bas.
This means you can declare 200 – 400k if you turnover 500k even if your bas show you make a loss.
If you do have a successful business you can’t survive without doing BAS??? – you must owe GST and have fines accumulating which starts to promp questions about ability to manage financial commitments.
Banks bought in bas requirement on low doc to confirm a trading business exists. Your problem with BankWest might be the if the trust is set up for investment rather than being a trading business. If this is correct they have a valid point. E.g not elligible for low doc.
Not trying to be negative – this is why industry and turnover are relivant.
It can proceed in a trust. Can you provide 12 bas?
What is your annual turnover and what does the business do?Cross collaterlising relates to security rather than debt servicing. If the debt levels are the same either way you shouldn’t need to x collateralise to make the deal work. When the banks / brokers lodge the deal on their computer the system will automatically link the security. If they are lodged seperatly You get no cross collaterisation. E.g. One lender – two applications.
No major issue if you have equity. Most lenders will let you go up to 80% of you home or 90% with mortgage insurance. Assuming you can service the debt.
Re your mum, you will need to make sure she can afford the repayments – might cost more than renting. You might deed to tip in some cash on a monthly basis.
Unfortunatly i’ve seen plenty of people lose money on property – similar situations. Forget about capital growth at the moment and have a look at what rental returns have been doing in the area. E.g. How much does rent need to grow for it to become positivly geared? How long will this take based on average rental growth over say the last ten years?
Keep in mind most economist expect an increase to rates so work off 1.0% above your current interest rate.
Also see if you can restrucuture existing debts to minimise the repayments. See if you can get your ato witholding rates adjusted to Have more money on a week to week basis ( as opposed to a big tax return).
Cashflow is king. If you still can’t afford to keep it you need to explore selling.
2 years ago I had a client that owned a 2 b/r property within 5 km of Melbourne CBD. Sold before anyone had heard of the GFC and lost 70k. This was after holding for 3 years.
Don’t get stuck in the trap of thinking all property is a good investment. Do you home work and cashflow projections before you buy. Don’t buy CRAP property “just to be in the market”. Don’t pay above bank valuations.
Not at that rate. Their offset is called misa which is more like a net based savings account rather than a day to day account. In this case you would take their standard varible with wealth package attached (this is called mortgage advantage via broker Chanel). Rate is then 6.61 less discount based onthe size of the loan.
Get a credit card with Cba. In six month you will be elligible assuming everything else stacks up. They have a 3 year variable at 5.93% that reverts to a base variable after three years . Base variable currently approx 6.1%. 600 app fee. No monthly fees for the life of the loan. Westpac anz and nab will struggle with the 95%. I don’t track what non banks have on offer.
The first lender won’t know if you lodge a second unless you tell them. It will be the bank taking the second that needs a deed of priority from the first otherwise they won’t know what level of the security is supporting existing debt. Without the DOP a major bank won’t do the second.
I am assuming you are talking about taking a second at a much higher rate. Eg with a non bank lender. Some lenders take a second with no DEP but the banks won’t. These type of second mortgages are more like caveat loans. You won’t get 6%
I have a second mortgage approved and ready to settle. Cba, nab and Westpac all do them.
Cba and Westpac are doing plenty due to their family pledge / guarantee products. The one I have approved is due to the client not wanting to break a fixed loan with another lender. The rates are the same as a first mortgage.
They are not really any faster as you need full credit approval, full valuation etc. The majors will still want a deed of priority regardless of The state as it caps the amount the first lender has entitlement to in foreclsoure.
Sill have to meet all normal lending criteria – no policy waivers. I can’t imagine someone wanting to do a small second by itsself as the return / commission is bugger all. They would also want the new investment loan.
It all depends who you bank with. Westpac and Cba lend 95% to existing clients however 85% and 90% respectivly for new to bank clients.
They have different policies re who is an existing client e.g. Westpac – know one knows. Cba – if you have a Cba credit card, home loan or personal loan , and have had this for more than 6 months – you can apply for 95%.
So you have Cba, Westpac and anz all for on the spot approval. Add nab and a few others as well because reality is anyone can get approval on the spot. Only Cba will be able to print contracts there and than at first appointment. Broker Chanel takes longer as they can’t prepare their own loan contracts.
If you take a second mortgage option the lender will need a “deed of priority” from the first mortgage holder / unless you go down the track of a caveat loan. refinance can also take a while as the new lender needs to get the title.
If you are refinancing from a reputable Lender (major or second teir bank) you can potentially get title insurance. This allows the new lender to settle before they have title e.g. You can refinance and have your néw loan finded in the same week as you apply.
Do you need approval only or do you need to settle?
Cba offer 60 min loan approvals. If the manager can approve the deal they then try Internet based valuations though rp data. If you get approved on the spot and rp data supports your Val they can print docs while you are there. You are then ready to book settlement. All at the first appointment.
If it goes to credit add 24 hours, if they need a Val add 48 hours. Anything over and above that comes down to the manager. E.g. If they let it sit on their desk – add two weeks.
I might call Maurice and get a couple of million for myself. I just need one of you to lend me $6000 to transfer to the Uk to get the ball rolling.I met this banker on the net who has 12B pounds and has offerred me half if i help him move the money to Australia. When this comes though I’ll give your $6000 back (plus interest) and payout my good friend Maurice.
I know it all sounds risky but if anything falls through I have plenty of other contacts I’ve made on the net. I’ve given my bank details too all of them so even if ones a fake the others should come through.
Now that I’ve almost made it in life I have met with a group who sell investment properties. They have said if I put deposits on 20 student accom apartments I can always flip them if my internet contacts are dodgy. I just need a short term loan for the deposits.
Nab are too conservitive. The banker must be dumb cause she didn’t approve it. I have no security.
Anyone want to get involved?
It’s a win win situation!I might call Maurice and get a couple of million for myself. I just need one of you to lend me $6000 to transfer to the Uk to get the ball rolling.I met this banker on the net who has 12B pounds and has offerred me half if i help him move the money to Australia. When this comes though I’ll give your $6000 back (plus interest) and payout my good friend Maurice.
I know it all sounds risky but if anything falls through I have plenty of other contacts I’ve made on the net. I’ve given my bank details too all of them so even if ones a fake the others should come through.
Now that I’ve almost made it in life I have met with a group who sell investment properties. They have said if I put deposits on 20 student accom apartments I can always flip them if my internet contacts are dodgy. I just need a short term loan for the deposits.
Nab are too conservitive. The banker must be dumb cause she didn’t approve it. I have no security.
Anyone want to get involved?
It’s a win win situation!Captain M,
NAB portfolio and NAB choice package are different products. Portfolio is mostly sold via business banking and has a higher annual fee. I think it is approx $550 – $600 P/A. The “portfolio limit” is what you apply for and have any guarantees signed for. You can then adjust your splits and even change the names on each split without the need to sign new contracts (one page variation). E.g. if you have a split in joint names you can change to a single name with a single form – no new guarantees as it is captured under you guarantee of the total limit. You can also increase one split and reduce another the same way – if you stay within the portfolio limit.I didn’t think they sold this via the broker channel. CBA has a similar product through their private banking (you need 2.0M net assets outside of your home to have a private banker at CBA) – you can also get it CBA Business Banking however not retail. PS – the comment above re NAB having a policy to cross collateralising all deals is a load of bollocks. Never saw such a policy when I was there and I had underwriting authority of $5.0M. It’s up to the way the deal is submitted – e.g. your choice.
Banker
Fredo,
In most cases banks work off gross income however bank managers can usually accept your net pay if it is deposited in to your account (only if it is deposited into their bank). This history will enable the banker to approve future loans without payslips. They will put the net figure though a calculator which will estabish what your gross annual income should be. You could say they work off an estimate of your gross income worked out via your net in the statements…
With this in mind you can apply to the ATO for a variation to your withholding rate (google: ato varying your payg witholding). If your depreciation is significant enough you can pay less tax each pay as opposed to getting the tax rebate at the end of the year. This is the only real way to get deprecition in to servicing.
Hope it makes sense. This is standard practice for larger clients e.g. Clients $5m plus. The other option is to work off full tax returns that itemise the deprecition. If the deal is strong credit will accept add back of depreciation.
Hi Richard – comment was actually meant for Dirty not Dan however I’d be interested in Dans feedback – and yours.
If a client has funds in off-set for three years equal to the amount of the investment loan and therefore does not pay interest – is future interest changed once offset funds are used for personal use still deductable – according to the ATO in my scenario they said no?
Key point being the expence was non existant for three years. The pursonal use triggerred the expence. What are your thoughts and is It not atleast a grey area?
