Hi Richard,

While I don't want to get into a tit for tat here

You may note in my responses that I made no mention of claiming the FHOG, obviously the client would need to make choices about if he where to claim the FHOG, if he was going to stay in the property, if he could claim the PPR, if he did renovate and move on, if he did decide to stay. My point was that if you talk to people outside the lenders direct that you can discuss many ways 'To skin that cat''. My objective is to find a client a solution to their problem LEGALLY and inform them at the time of meeting of all the options and all the ramifications of those options. The point was to stimulate thought, which is what these forums do obviously.

As you say, when you do the number of deals you do then you would know this of course and I respect your wisdom. Sometimes though you have to do the same, I have been a Top 100 broker nationally for many years, run a group that settles approximately $300M in mortgages annually and has been in finance since 1991 and for the last 2 years have been rated the top 20 brokerages nationally. Acknowledged for its ethics, morals, treatment of clients and customer service. We look outside the square and find solutions. LEGALLY.

As i say Richard, I respect that you are an experienced broker who has been posting on this site for some time. But I do take offence at insinuating that anyone, including myself, may do something illegaly.

Regards

It is not mortgage fraud if the property is moved into and partially let to boarders/tenants with an appropriate lease put in place and the lender accepts these leases as servicible income and accepts the well explained and documented application to support why servicing is evident. When you discuss with the credit assessor in the credit department at the chosen lender about the situation so he understands your case and allows an otherwise marginal service case that may be initially rejected by the lender to now proceed.  Also, while one lenders servicability calculation may be lower than anothers, a lender that can 'Look outside the square' is also important in getting some applications approved, it is not always just about servicability. If that were the case then everyone could just do their own applications and we as brokers would soon be out of business. If the person buys the property as a PPR and does move in as their PPR under these circumstances and all income for the rental is also accounted for then what I am saying is that there is more than one way to skin a cat!! Under current laws the applicant can then within twelve months also clainm that PPR reduction if they do choose to stay in the property.

Under these curcumstances setting up a loan as an investment initially is totally legal and it leave options for flexible future decisions.

The preparation of your application, provision of a good explanation with all supporting documentation largly will determine if approval is gained or not.

Hi Wombat,

Whoever gave you the tip to READ books was on the right track. Buy 10 books on property for about 300 bucks and read those. Mark the information that is consistent in those books and you will see that many ideas keep occurring in different areas, a good clue that these ideas are shared by many. It always amazes me that  someone can spend maybe a year of their life putting a book together that may contain 10 or 20 years of their knowledge and experience and that we can then buy it for 20 or 30 bucks, where can you get better value than that?

You may then choose to spend hundreds or even thousands more on further education but get yoiurself a basic grounding CHEAPLY first. At least then you can make an educated decision.

Remember the hare and tortice story, well investing is similar, those that race ahead without sound knowledeg are often the loosers in the end. Its a long life, don't think you will miss out of you are not investing today, get ready first and invest tomorrow.

Cheers

Hi Ash, I am late on the scene hear, but the first thing I think you should do is a little reading on property and investing. Books by Steve Mcknight, Jan Summers are of good quality and not written by people trying to flog their own product. Then find a good licenced credit advisor and possibly a property mentor who can guide you through some hurdles. You sound like you are in an enviable position with parents who are willing to help you and you need to maximise this opportunity. Talk to a number of people, listen to different ideas, read some books and then make an educated decision. What is right for one person is not often right for another and given that your parents are helping you then it is important that they are in the end comfortable with your decision, even if that decision is not the exact one they are thinking of now but a sound alternative that is explained and makes them comfortable.  To try and answer all your questions on a short forum would be foolish, you need to spend time and invest in some guidance and eduction to help make the right decision.

For every indvidual opinion ther is generally an opposing one, this just proves that one type of investment does not suit every situation and again, your decision needs to be based on YOUR individual situation.

Good luck.

Hi Free to Bee,

I just had a similar situation with a client and CBA and because the client was claiming the PPOR (Principal Place of residence) deduction for stampduty then the CBA would not allow gearing to be used for service as an investment loan. The way we overcame this was for the client to not claim the PPOR deduction until after settlement. Which in Victoria you can do for up to 12 months after settlement.
Depending on your state, check the rules and you may be in the same situation. Once we did this the CBA were happy to treat as an investment with all service calculations associated such as gearing and rental addback to be allowed.

More than one way to skin a cat.

Cheers

Hi Joel,

This is one argument there may not be a right answer to but I'll give yo my 5 cents worth. If the debt does not have a tax deductable component IE. The car loan cannot be claimed. Then a rule of thumb should be to pay off personal debt with the highest interest first, in this case the car loan. THEN, the smart thing to do would be to continue making the payments that were going to the car loan into the mortgage. That woul be how to gain the biggest overall benefit.

Not financial advice, just a humble opinion.

Hope this helps

I've used BMT Quantity suveyors for 3 reports on apartments in Melbourne over the last few years, They have provided very thoughrough and detailed reports which my accountant has been extremely happy with.
I recommend them to my clients, and NO, I don't recieve any kickback for doing so they are just good at what they do.

Mate, just remember all records count, the more you can show of a solid repayment history or debt reduction when you apply for the loan, the better your application will look in the eyes of a lender.

Regards

Colin

Hi Bucko,

Just to add a little that may help clarify, although your 2 responses so far are exactly correct.

What I always tell clients is this, it does not matter what the money is borrowed against but what it was last 'USED FOR' that designates if it is tax deductable or not. Hence if you paid down the loan and then redrew the money it would only be tax deductible if the redraw was for a deductible investment purchase.
Hence whomever put you on the track of an offset account for an investment property was 100% correct.

Keep paying the money into the offset, if you pay it into the mortgage and the mortgage has a redraw facility it is just as simple to get at anyway.

Between the 3 of us hopefully this has cleared up your question.
Regards

Colin.

Hi Guys,

Old story. If it sounds too good to be true it likely is. No one gives away 140k. Two things, at 280k the block is likely very over valued if you look closely and why would they do it if they thought that they would loose. They would not. So who looses?

The very first thing you should be looking at if even considering something like this is the TRUE value of the land, then the TRUE value of the building that the developer now has the EXCLUSIVE rights to build.

Be careful.