Forum Replies Created
Like Geronimo, i worked for a subsidiary company of Sample and Partners (possibly the same one).
When i say i ‘worked’ for them, i did the initial 2 weeks training and went to a total of 3 clients interviews before i told them where they could stick their job.
World Home Loans is in fact owned by Sample and Partners, despite the fact that their script, which incidentally claim is ‘ASIC approved’ cough cough, clearly states ‘unlike Wizard and other such lenders, we don’t actually lend the money, rather we act as an intermediary’. This in itself is so shady it’s not funny.
They apparantly do sell other banks products, such as St George and Suncorp, but i never heard of any consultants writing loans from other lenders.
They focus almost entirely on line of credit products, with accompanying material showing you how to pay your loan off in something like 8 years, complete with miniscule writing down the bottom saying to achieve this result you have to pay virtually double what you are paying now, of course not informing the client of this.
Oh did i mention the line of credit product that they offer is about 1% p/a above what you can get at any of the major banks?
During the training i questioned numerous claims and was almost shouted down by the presenter. They stressed the most important part of the spiel is ‘conditioning’. Ummmm guys, i thought the most important part was actually assisting your clients to obtain a better product?
Oh yeah, they also charge the client over $3000 for the privilege of being bent over.
Sample and Partners have been under investigation from ASIC in the past, and may still be.
If anyone here gets contacted by Sample and Partners, or one of their subsidiary companies (of which there are a few) run a mile. Any half decent broker will put you in an infinately better loan and you shouldn’t have to pay for the privilege.
Just a minor point but DEF usually stands for deferred establishment fees, means exactly the same thing i guess but if you come across this terminology in the future don’t be confused.
You don’t live in QLD by any chance do you?
At the moment up here there is a massive under-supply of rental properties and most that become available are usually flooded with applications. They are even holding rental auctions! It is simple mathematics to work out that most applicants in this situation will be unsuccessful.
Don’t give up home and keep plugging away, you will eventually be successful, and it may just pay to check that you aren’t blacklisted on any tenancy databases such as TICA.
As Bridgebuff points out, generally ABN’s are required to be eligible for a lo-doc loan.
There are instances however when this does not apply, there are lo-docs available for PAYG employees (therefore an ABN is not required) and there are also a number of lo-docs where an ABN isn’t required, or isn’t checked. Westpac i believe doesn’t check ABN’s during a lo-doc application.
Lo-docs used to be very inflexible, 80% LVR and 2 years minimum self employment but with a reasonable percentage of borrowers now taking this route they have become increasingly more flexible. There are loans available to 95% and those self employed for 1 day (well have an ABN for one day anyway….). In fact there are a couple of products that will allow 95% LVR with 1 day registered ABN. Obviously interest rates are higher than full doc loans in this instance but they can be useful to some.
On lower LVR’s (around 80%) the interest rate is usually comparable to the standard variable rate of the same lender, maybe just atouch higher but they are certainly competitive.
Jamie
Sorry, $200 a week should read $200 a fortnight. It’s been a long day!
Hi Robyn,
In my opinion, if you are struggling to meet current repayments then perhaps the IP idea should be put on hold until the disposable income situation improves.
In the current market, cashflow positive properties are difficult to find, therefore in all probability an IP would just add to your outgoings, rather than supplement your income, and therefore create a further drain on finances.
As for obtaining finance, it is difficult to say without further information but it sounds like your partner is a perfect candidate for a lo-doc loan. If you are not familiar with the term, lo-docs are primarily for the self employed who cannot, or will not (for various resaons) substantiate their income. Tax returns are not required and in most circumstances an income declaration will suffice. 50k will be sufficient for a 250k property at 80% LVR.
Judging by your repayments (assuming a 30 year loan) you seem to be paying in excess of 8% p/a. Even assuming a 25 year loan, the rate isn’t spectacular so this brings a whole new aspect to your situation. Perhaps something along the lines of this may be feasible –
– Refinance to an interest only loan (if you have enough equity built up you may be able to refinance into a number of lo-docs with very good rates). This will save you in the region of $200 a week.
– Rent your current house out. Most further renovations will then become deductible, further reducing the cost of improvements to your property.
– Rent for maybe 12-24 months until your financial position improves somewhat and then move back into your home. You should then have more equity, be in a significantly better financial position, and have had a good amount of time to research anything related to property investment and study local areas and trends in some depth.
Of course this is only one option, but it could be worth considering if your current situation really is dire. Whatever direction you decide to head in i hope it all works out well!
Jamie
Unfortunately if you are an Australian resident for tax purposes, you are required to pay CGT whether the property is located in Australia or overseas.
You may be entitled to foreign tax credits if tax is paid in the country where the property is located, but from memory (correct me if i’m wrong) New Zealand has no CGT so this may not be applicable to you.
Originally posted by Terryw:
Trusts can help cap tax at 30% as they can distribute to a company as a last resort. Company tax rate is a flat 30%.While certainly theoretically possible, wouldn’t that defeat the purpose of a trust entirely?
Although i certainly don’t profess to be an expert in this area, if someone was happy enough to be taxed at a flat rate of 30% wouldn’t they be better off as a company rather than a trust? Granted the costs of establishing a trust are minimal, but setting up a company just to be a beneficiary of a trust would seem kind of pointless….
My personal view (not advice) than unless you have limited potential suitable beneficiaries or have very high turnover, that a trust would be a considerably better option.
One particular lender i deal with quite a lot when it comes to casually employed applicants lends to 100% LVR if casually employed for 12 months or longer, with an extremely competitive rate. However it’s very hard to get a high LVR loan (90%+) at adecent rate if casually employed less than a year.
As Terry mentioned, if your husband has only been casually employed for ashort time, a lo doc may be your best bet.
Thank you Terry, as usual you are a wealth of information!
You quote $7000 for fees also, i’m not sure what state you are in but in South Australia you would be looking at over $7000 for stamp duty alone, nevermind LMI, conveyancing, valuations and so on.
Even in the least expensive states/territories you would be looking at around the $5000 mark just for stamp duty.
I assume you would be borrowing the $185000 through accessing the equity you have in your own home?
If not then it will be impossible to borrow $185000 against a property valuation of $163000 unless a personal loan or similar was involved which really isn’t a good idea in my opinion.
I realise this is a simplistic question and i’m sure you are well aware of the implications, but it pays just to be certain. A couple of weeks ago a client wanted to borrow $650000 on a property worth $480000 with no equity whatsoever! No matter how hard i tried, he could not grasp the concept of LVR.
Just adding further to what Wayne said…
In this scenario i doubt the MIAA will be of much use in this case. The MIAA is more of a figurehead professional accreditation service which most lenders require you to be a member of before authorising you to write loans on their behalf.
COSL is the credit industry ombudsman and in my opinion would be the people to contact in your particular case. MIAA members are now required to be a member of COSL so if your particular broker has MIAA accreditation they will also be a member of COSL and they will deal with your dispute on your behalf.
That being said, if the broker isn’t a member of either COSL or the MIAA there isn’t much you can do short of initiating legal action against the broker in question. You mention your properties are located in WA, is your broker also located in WA? If so WA has a licencing requirement for brokers which the other states do not. I am based in QLD so i am unfamiliar with the licencing process but i imagine there would be stricter requirements than elsewhere to operate as abroker. This would mean there is a higher chance they are members of an external dispute resolution service such as COSL. There are WA based brokers on this forum so perhaps they could elaborate.
With the details provided it appears as if the broker has possibly acted outside both the MIAA code of conduct (if they are a member) and more importantly the UCCC (uniform consumer credit code).
All fees and charges applicable MUST be disclosed to you and there must be no deceptive conduct at any stage during the process. Whilst the fees and charges in refinancing may well have been disclosed on paper, in my opinion it is dishonest of the broker to not inform you orally also.
Failure to inform you orally when you couldn’t be reasonably expected to realise the implications of the refinancing of the original loans cost be construed as misleading under both the MIAA code of conduct and also the UCCC. Please not this is not legal advice, you should seek this independantly.
Regarding the original loans, i assume they were a fixed rate or honeymoon product and the $10000 were break fees? It is almost unheard of that lenders charge break fees for a product switch where the original loan was a standard variable product.
My advice, find out whether your broker is a member of COSL and make enquiries through them if your broker is unwilling to discuss the matter further.
Go to http://www.abr.gov.au and apply online. Takes about 5 minutes and your ABN is emailed to you instantly (assuming no futher checks need to be conducted)
Much easier than dealing with the ATO!
Haha no, i actually used to live in the area and know the house, that was the only reason i singled it out. No doubt there are many better buys, i was thinking primarily of the land value rather than the dwelling anyway, i’m a bit peculiar in that way!
Anyway hope it goes well and you find something suitable, be sure to let us know how it goes
Personally i’d prefer something like this on Bribie.
Quite a few older homes in the Bellara/Bongaree region for mid 200’s, it’s just my opinion but unless you have a particular affinity for the Toorbul lifestyle, these would offer greater potential.
Toorbul is a funny old place….
As the crow flies it is not too far off the beaten track, but it seems to take ages to get anywhere from there! For instance you could virtually throw a stone across the passage to Bribie Island, but to drive there takes the best part of 30-35 minutes. It really is quite isolated. Caboolture is the nearest major centre.
Toorbul in all honesty is primarily just a small fishing township, a large proportion of Brisbane’s oysters come from Toorbul also.
Things to watch out for are flooding as has been pointed out, the whole area is rather ‘swampy’. For some reason Toorbul always seems to suffer badly during storms which are common in the summer. But the number 1 and 2 things to watch out for are…
Mosquitoes and Sandflies! There are milllions of the things in Toorbul and surrounding areas. You just can’t escape the little buggers!
In summary, it’s not an area i would personally live in. It may be a nice area to have a caravan and take a monthly trip up to go crabbing or something but any longer and the novelty would start to wear off quickly. The standard of the permanent residences there are also sub-standard (with some exceptions) on the whole and if you wanted to construct a rental property on the land rental yields are woeful at present.
It really is hard to describe, it is a strange old place. If you haven’t visited Toorbul before i’d highly recommend a visit before making any property purchases.
Maybe consider Bribie Island instead, property is still relatively reasonably priced with far better facilities and an infinately better transport network. Not to mention virtually anywhere on Bribie is within 5 minutes of a good surf beach. Toorbul may be close to the water but it’s still 40 minutes (at least) from the surf and the ‘water’ that i speak of in reality is closer to smelly mud flats.
Jamie
As Lena mentioned, you will probably have to be more specific, there are many southern Brisbane suburbs and quite a few bayside suburbs as well.
Not only are there are a large number of suburbs, but the southside in particular has a massive variance in suburban ‘desirability’ (and therefore price). It contains some of the best suburbs in Brisbane (Robertson etc) and some of the worst (Eagleby, Beenleigh and so on).
Regarding bayside areas, most of the suburbs would be regarded as desirable and have a high percentage of owner occupiers. Rental yields are low at present, but much of the bayside has perfomed better in terms of capital gains when compared to the rest of Brisbane during a very flat period in the Brisbane property market. Manly, Wynnum, Wellington Point, Victoria Point and Cleveland could all be grouped in this category. Raby Bay (adjacent to Cleveland) would probably be the most prestigious bayside suburb, almost impossible to find a decent house for under $1 million these days. Ironically areas of Raby Bay (and Hope Island/Sanctuary Cove, a very swish area further south) are situated on land which 30 years ago consisted of mudflats!.
If you have some particular suburbs in mind post them here and i’m sure there will be no shortage of Brisbanites willing to give you an opinion.
Jamie
Hi Lena, there a few things i’d be very wary of with properties such as this.
As you probably already know, capital gain in the less desirable suburbs of Brisbane, particularly with units, has been less than impressive in recent times. I’m only taking a stab in the dark here but 30k south of the CBD i’m taking a punt at maybe the Eagleby/Beenleigh or Logan areas?
Secondly, even though the owner, who may be the best tenant in the world, has offered to lease back the property for 6 months, finding decent tenants after that may be near on impossible. There are certain areas of Brisbane, the Logan/Beenleigh/Eagleby area which i mentioned being one of them, that finding suitable tenants is next to impossible. To the south and south west of the CBD there are areas of massive unemployment and very high crime levels.
Obviously i have no idea of your objectives or goals with this property but i’d be asking myself this – Is it worth investing in a cashflow negative property in an area (if my location guess is correct) which i believe has very little scope for CG, at least in the short term, with the strong possibility of having difficulty finding reliable tenants after the initial 6 month lease back has expired?
However if after you have done all your DD and decide that it fits your investment criteria/needs then by all means jump right in. But it certainly sounds like there is plenty to consider here before making an offer.
Jamie
The catch is lo-doc and no-doc loans require a substantially larger deposit.
Where with traditional full documentation loans you can borrow up to and in excess of 95% LVR, as TerryW says you would generally be looking at an 80% LVR at best for a no-doc loan. It ties up a lot of capital that wouldn’t otherwise be required if full documentation were provided.
The loans are generally aimed at self employed applicants who either have incomplete financials, or have complete financials but don’t wish to disclose their income.