The general rule of thumb, is the less work involved, the less financial gain. The more parties involved, the more clipping of the same ticket.

That’s a very small discount when looking at flipping, as purchasing and selling costs eat into most of the transaction, and whats left will be ravaged by tax.

The idea Ronnie is that the excess funds you are not paying into the loan are used elsewhere, either invested to grow the portfolio, or more pay down non deductible debt. It’s a zero sum game with that respect, however there is more practical tax benefits from paying IO on investment debt whilst there is non deductible personal debt in play.

If you have an established portfolio which you don’t want to grow and non non deductible debt it may be practical to switch to P&I for some/all of your investments.

Listed beneficiaries will generally be dragged into the finance perspective in any case, so you’ll be back to square one.

A subprime lender may consider looking at this sort of deal if it can shown that the issues behind the defaults are not ongoing, but rates will significantly higher than prime lending.

I think Benny has identified a key issue. The yield appears to be sub 5%, which is quite low for a regional apartment within a NRAS complex. Not ticking too many boxes at this point. It might be worth playing devils advocate with this, looking at an altenative similar style security within metro Bris. How do the numbers stack up in comparison?

The NRAS properties within the complex can play a role in valuations over the medium term, as this essentially means the complex is housing a large number of low income individuals, which may mean it can be detrimental to capital appreciation, just the same that Public Housing areas suffered until being privatised.

How is the allowance paid? Some lenders will accept 5-6k car allowance per annum if it meets their criteria.

• This reply was modified 10 years, 4 months ago by  Corey Batt.

Generally lenders look at the monthly servicing cost of 2-3% per month on the limit. In this case reducing a limit down $500 would only achieve a $15/per month servicing boost per month at best, any loan that borderline is going to have a multitude of other problems which could be solved by using different lenders/products etc.

A *broker* (not a branch staff member) will be able to simultaneously run your serviceability across dozens of lenders at once, and factor in a lending strategy to try extend these figures over the long term – so there is no need to see multiple to see what figures each come up with.

A broker will go through your financial situation, future plans etc before submitting a pre-approval. A part of this will include calculating your serviceability with their panel of lenders.

Lenders generally take into account rent, interest, generally negative gearing addbacks with rental properties. They don’t factor in IP depreciation or cost deductions. They also generally only take into account 80% of rent received and potentially inflated interest rates to act as a buffer for future rate rises.

Do you think anyone likes to pay LMI? ;)

Certain professionals and lender employees can get 90% no LMI on their loans as the lender must view them as low risk/valuable customers.