Forum Replies Created
It is done in most cases by floor space rented out / total floor space
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=2&H2
Get a valuation done !! see link below !
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=3&H3
The reason your question may have not been answered is it is bordering on giving financial advice.
No one can really advise you on where the interest rates are going to end up being.
A person usually fixes the interest rate more to make certain what their expenses are going to be.Have you heard of interest rate averaging
What you do is you take out fixed rates on portions of your loan
So 20% at 5 years
20% at 4 years
20% at 3 years
20% at 2 years
20% at variable rateThe 20% variable lets you pay off more if you need to
20% goes variable in 2 years time and at this stage you can chose if you want it to remain variable or fix it for 5 years
20% goes variable in 3 years time and at this stage you can chose if you want it to remain variable or fix it for 5 years
20% goes variable in 4 years time and at this stage you can chose if you want it to remain variable or fix it for 5 years
20% goes variable in 5 years time and at this stage you can chose if you want it to remain variable or fix it for 5 years
The advantage of doing this is that a small portion of the loan goes variable each year and doesn't largely effect the overall loanI know someone who has done this with the one lender.
And I also read about it in Australian Property Investor MAgazine several months ago.
l_b29265 wrote:I am wanting to apply for a loan(low doc), and need 20% deposit ($62K)to do a development. I only have around 7%($21K) deposit, and so am $43K short. I own 2 properties(i.e have a mortgage on 2 properties), and If I had my 2 properties revalued, I think I should have around $162K in equity above what I am still owing on them. I am not clear on if I can access the equity in these to use as a part deposit, or of its even possible? Could anyone clarify how this might be possible and explain in simple terms? Many thanks if you can help.When you say equity what you need to do is look at how much you owe and the actual value so as an example
2 properties values at say 340,000 (perfuma method (guess)
loan owing 178,000
What you need to look at is 80% LVR
80% * 340,000 = 272,000
this is most likely what the bank will lend up to as an equity loan.
So 272,000 – 178,000 = $94,000 that you could borrow as an equity loan.
You can get a line of credit loan for $94,000 in this example if you meet servicing requirements.
(also you need to be able to service the development loan requirements as well)So releasing equity via a line of credit loan gives you asset separation from the development loan (different bank)
( this is not manna from heaven – you have borrowed this money) in this example
You can use the two properties as security for the development loan but the risk of losing all your assets if the development falls over are higher. High risk (advantage you do not borrow from equity)
In this dangerous case all your assets are valued and LVR is worked out on total assets value / total loanwhy have investment property.
It is hard to see any good points for it at the beginning.
You feel like you are paying out money for repairs and getting a low rental return.
Property is a long term investment. Over a longer term the borrowed money is usually 90% other peoples money and 10% your money.
so if you have a large borrowed amount the value of the property rises over time and so does rent.
Remember this is not your money invested it is the banks money.
So if you own a 200,000 house but only outlay $20,000 to buy it and it goes up in value say 7% p/a averaged over ten years. =14,000 in first year then you are really making 14,000/20,000 * 100% = 70% on your outlay.
Then you can depreciate the repairs over time thus increasing your expenses but reducing your tax payable.
Look at it as a forced saving scheme that takes time to show promise.
If you sell it you incur capital gains tax but if you cna hold on to it over time you can pay down the loan and make it earn you money rather than cost you money.
THen you can borrow against the equity to fund the next investment purchase. (this is known as leap frogging)
If you are good at the share market you can make returns but the risk is higher and you can lose money.
Property is a lower risk so banks lend more against it than they do against share values.
Shares on the other hand do not have land tax, stamp duty , council rates, insurance (unless you but a put option) or repairs.Commercial Property values are directly related to the rent achieved.
I think from memory it is a ten fold amount.
So if a property is renting for $100,000 then the property value will be around 1 million
Have no idea on the growth of rent in commercial propertyTheresa,
You need to consider how much you owe on these two properties.If you sell one of them are you releasing a large amount of equity?
If you have made a capital gain you have to pay capital gains tax
How much does the property cost near university ?
Do you have a deposit saved up for next house purchase?
What I am trying to say is there is some information missing to know what your situation is.
http://money.ninemsn.com.au/article.aspx?id=100613
http://www.homeloanexperts.com.au/no_deposit/no_deposit_LMI.php#rates
http://mortgageinsurance.genworth.com/RatesAndGuidelines/RateFinder.aspxGive you a rough guide only the banks have the exact lmi calculators maybe a mortgage broker could have software that works it out for a customer
use a quantity surveyor
You should back off.
You could advise them to go to a lender first and get a loan appraisal to have their finances in order first so they are aware of any financial limitations on what they can afford before they commit to a contract they may not be able to afford.
This will bring them to blame the lender rather than you for being given the real facts on how much they can borrow.One thing they may need to wary of is some developers pay money to lower the repayment for a set time period.
In the fine print the loan reverts to a variable loan after the time period and so the repayment amount increases accordingly.You may find finance through a non bank lender but lvr would be lower – some self insure the loan
That is not an easy question to answer. Maybe you could take a half way figure between the two extremes of mortgage interest ranges say 7% p/a or ask the loan provider if they can tell you what the interest rate and date was at each rate increase.
It really depends on when the payments were made for the boat repairs.
As an example
Say year one $1000 was spent then really this would be $500 due to half share in boat
FV=PV(1+.07)^5
future value = 500*(1.07)^5
future value = 500 * (1.402)
future value = $701
second payment
Say year two $1000 was spent so half share $500
FV=PV(1+.07)^4
future value = 500*(1.07)^4
future value = 500 * (1.31)
future value = $655
Third payment say year 3 $1000 was spent so half share $500
FV=PV(1+.07)^3
future value = 500*(1.07)^3
future value = 500 * (1.225)
future value = $612
Fourth payment say year 4 $1000 was spent so half share $500
FV=PV(1+.07)^2
future value = 500*(1.07)^2
future value = 500 * (1.14)
future value = $572
So total future value = 701 + 655 + 612 +572 = $2541 based on 7% p/a interest rate
Basic Finance formula for working out Future money value
N = number of years left to end of term on each expense incurred
int rate = annual interest rate percentage /100
PV = principle value of expense at time of expense incurred
Total FV = PV5(1+int Rate5)^N5 +PV4(1+int Rate4)^N4+PV3(1+int Rate3)^N3+PV2(1+int Rate2)^N2+PV1(1+int Rate1)^N1
If you can find out the interest rate charged you can average the interest rate over the number of years remaining
Say at 1st year int was 9% and next year it was 7% and year after it was 5% and year after that it was 4% as an example
two ways of working out
average interest rate so (9 + 7+ 5+ 4)/4
or place in an excel spread sheet so fv5 = pv5*(1+interest rate5) then take this figure and fv4 = (fv5+( pv4))*(1+interest rate4)
and then take fv4 and fv3 = (fv4+( pv3))*(1+interest rate3)
and then fv2 = (fv3+( pv2))*(1+interest rate2)
it would look like
or place in an excel spread sheet so fv5 =500*(1+.09) then take this figure and fv4 = (545+(500))*(1+.07)
and then take fv4 and fv3 = (1118.15+( 500))*(1+0.05)
and then fv2 = (1699+( 500))*(1+.04)
fv2 = 2287
fv2 also would be total future value as each component has been compounded into each other to get total future value.you can substitute the future values to make into the formula
fv5 = pv5*(1+interest rate5) then take this figure and fv4 = (fv5+( pv4))*(1+interest rate4)
and then take fv4 and fv3 = (fv4+( pv3))*(1+interest rate3)
and then fv2 = (fv3+( pv2))*(1+interest rate2)you can substitute the future values to make into the complex formula below
fv2 = ((fv4+(pv3))*(1+interest rate3)+( pv2))*(1+interest rate2)
fv2= (((fv5+( pv4))*(1+interest rate4)+(pv3))*(1+interest rate3)+( pv2))*(1+interest rate2)
fv2= (((pv5*(1+interest rate5) +( pv4))*(1+interest rate4)+(pv3))*(1+interest rate3)+( pv2))*(1+interest rate2)
total fv = fv2 * (1+ interest rate in last year)
total fv= ((((pv5*(1+interest rate5) +( pv4))*(1+interest rate4)+(pv3))*(1+interest rate3)+( pv2))*(1+interest rate2) )*(1+ interest rate in last year)The future value gives you a similar amount save if you had paid the money off the loan due to it taking into account the compounding effect had the money come off the home loan over the time periods.
Australian Property Investment Magazine April issue has an article in the back pages on Victoria. I think it mentioned Footscray but I am not 100 percent sure.
Get the debts sorted out.
Keep saving
Investigate non bank lenders. Do a search on the internet.From what I was taking in from watching lateline business the concern is that if the banks do not allow a reprieve during times of unemployment (current recession) then the property market values drop and the banks start liquidating homes and incurring losses from the values dropping. Then you have banks failing over or declaring major losses and more job losses.
Do you have a history of savings as from what I have seen Banks are currently tightening the proven savings evidence requirement because of the FHOG suddenly adding $24,000 to first home buyers deposits.
Sounds sus like illegal gains from crime.
The bent cop on the Bill converted stolen cash to diamonds to bring money into Australia in the show the BILL.Step one go to lender and find out your borrowing capacity so you know how much you can afford.
Sometimes crappy properties that need TLC are not advertised on domain or http://www.realestate.com
You may have to go into a real estate office and ask what properties they have that suit your price range and requirements.
Only the best properties are in the window or on internet.
One property near me is on the internet but it is not in the window of the real estate agents .
see
http://agents.realestate.com.au/cgi-bin/cs/run.pl?_t=Details&_c=XDOVER&id=105494675&code=70984725&time=1239339623&f=0&p=10&tot=6&t=resI did not find it on domain
Is it your contents that are being insured? That is the only reason to have contents insurance.
LandLord insurance covers you for things like malicious damage, lost rent while getting damage fixed, public liability insurance (10 million dollars) in case someone is hurt in your property and building.
I would recommend you investigate Landlords insurance do a search in Google on LandLords insurance
7% is what I pay but be aware that there is also a fee for drawing up the new lease and you may have to pay for advertising to obtain a tenant in a local newspaper or a major newspaper.
A furnished apartment would require contents insurance and you should get a quantity surveyor to value the furniture so as to work out a depreciation schedule for tax.
You may find a need for a furnished apartment for Northcote Tafe students or maybe Latrobe university students in Plenty Road Bundora.
It might be worth talking with student services at Latrobe University or Northcote Tafe to see if there is a need for accommodation for students in the area.A property manager is worth 7% if things do not work out and you have to deal with the tenants tribunal or VCAT.
I would suggest that you attend once every 12 months or maybe once every two years. You will have a more selective eye than a property manager who looks after many properties. You really want to look for wear and tear and although you can't blame this on a tenant you should get these things fixed to keep your property in a good state.
My tenant tells my PM on the condition report because they know that I get any problem fixed for them asap as I regard my tenants as not just paying rent but rather that they are paying for a service and a certain standard of accommodation.I do not attend the inspections or have I been asked except between tenancies.
But my tenants know I get things fixed when they ask me and sometimes when they don't ask me.
I am sure a tenant would be less intimidated by inspections if you took a pro active apporach at fixing problems rather than blaming the tenant for it and taking it out of their bond as has been my experience as a tenant when I rented.At the very minimum you should do a drive by inspection at least once a year and it is tax deductible keep record of distance.
You want to know they are cutting the grass and not dismantling cars on your nature strip or front lawn.scullyman
Lesson
Do not rely on one banks version of reality
Do as my wife does when she goes shopping – look at many shops and compare prices and policies
Lesson two
Look else where as lending policies differ between lenders and do not authorise any lender to access your credit record until the loan has been approved !
