Forum Replies Created
http://law.ato.gov.au/atolaw/view.htm?locid='PAC/19970038/118-145'#118-145
The above link may assist further. Your Accountant should be able to point you in the right direction, but if in doubt you can always request a ruling from the ATO on your individual circumstances but this will take time but give you a clear understanding.
Regards Grant
Hi,
I am happy to have a chat with you on the phone with no obligation to you to try and answer some of your questions and to give unbiased feedback if you like, what you do with the feedback is up to you, but I am happy to assist if need be.
Regards Grant
HI Ralph,
I to cannot comment on any of the above mentioned courses but I do receive emails from Knowledge Source who seem to promote a lot of these seminars for various speakers and promoters of their products. There are also companies out there who are more a fee for service for more specific education based around your strategy and what you are trying to achieve specifically.
This forum will also open you to a good number of people with great knowledge who will be only too happy to answer questions as well.
Regards Grant
I have been to Newman, have clients in Newman, and know some of the Developers there as well. Newman is still considered a Mining Town, it was originally designed to be a temporary town for a mining hub. Local Council in the past few years have addressed the Town centre and replanned and developed a more permanent and user friendly township.
Newman is predominantly a BHP town with Whaleback mine just outside of town. There is no tourism focus in Newman and most tourists keep driving on as there is not much to see and do.
As previously noted, lenders are nervous and this is demonstrated in LVR ratios, and I think that you will also find that many lenders will discount the rent for serviceability as well, anywhere down to 50%-60% instead of 80%.
Regards Grant
If the site is DA Approved, did you receive the Drawings submitted for the DA? To take on a 7 apartment development as your first venture is a big step, and I would recommend that you talk to as many QUALIFIED/EXPERIENCED people about moving forward.
As mentioned earlier, the funding on the Development will be Commercial, so be prepared to put up a considerable amount of cash/equity to get funding.
Regards Grant
Hi Jenny,
Yes you will need 5% Genuine Savings, all lenders nowadays with Loan to Value Ratios over 80% want to see Genuine Savings.
Regards Grant
Hi Shahin,
I agree, every persons circumstances are different and a full understanding of clients needs and personal circumstance should be taken by a broker before any product comparisons are presented.
Regards Grant
Hi Jenny111,
Homeloans is the lender that offers this loan package. Following is an example, (Please note that the interest rates may differ at anytime and the following is simply an example)
$400k Purchase
Term Loan with 100% Offset @5.79%pa
$360k (included in LVR: Max 95% ($12k LMI not included in LVR)
Plus
Line of Credit @5.89%
$20k (included in LVR: Max 95%)
Plus
Secured Visa Card SVC @5.89%
$20k not included in LVR.
= Total Borrowing $412k
The SVC can be used for the following purposes: Payment of Loan Application Fees, Payment of Stamp Duty, Payment of Solicitor Costs and any Loan Fee or Purchase cost.
The SVC CANNOT be used for: Deposit, to consolidate debt or refinance any part of existing debt.
Other points to note about the SVC:
Drawn down at settlement and the card is then sent out and received approximately 2 weeks later,
Minimum limit $500, maximum limit $20,000,
SVC credit limit included in servicing at 3% of limit, but NO LVR calculation,
Up to 55 days Interest Free,
The LOC must remain open for the SVC to operate, as these two accounts are linked.
Regards Grant
You would split the loan to be able to demonstrate for tax purposes the use of funds between Personal and Investment. Good Financial Housekeeping…
Hi,
I have just read the thread and thought to comment as well. The $40k that you refer to is Personal Debt so it gets priority either way. How and when you choose to pay this is up to you. To transfer over to your Offset on the new debt really defeats the purpose as it is still Personal Debt. Initially you may want to look at an Offset on that $40k split to offset the interest along with other cash flow such as Wages. This will assist in the interest cost whilst you build if you are using these funds.
Once you move into your new home, at this point in time you can look at the balance of the Offset and pay down the debt, or transfer the funds over to the other loan, this will really just come down to what balance the offset is and what can you affords to pay down off of the loan at the time.
What you need to do is think through a cash flow strategy to help you pay down the Personal Debt sooner than later, this can be maximized by using your offset with Wages, Rent, Tax Deductions from utilizing an ITWV, and other savings.
Regards Grant
HI,
There are various products in the market place which can become confusing. As noted in previous posts, the Broker should have completed a Client Assessment to understand your needs and what you are trying to achieve. For a Mortgage Broker to advise you to fix, I believe is stepping over the boundaries of their advise that they can give. Only you can really decide to Fix or keep Variable, always remember if you need to sell the property because your circumstances have changed, with Fixed Rates there will be exit costs which could run in to the tens of thousands, dependent on time and interest rates
Looking at your description of the facility, it looks similar to a Hpmeloans offer. If it is Homeloans and the product that I think it is, there is an Offset (on the Term Loan) and a Line of Credit, as well as a Secured Visa Card at the Line of Credit loan rate. (Across all lenders a Line of Credit is always charged at a higher interest rate than a standard loan),
The term loan should be at at around 10 basis points less (0.10%) than the Line of Credit.
The loan product is ideally suited for high income earners with lower deposits, so the lending can actually exceed 100% Loan to Value Ratio when the Secured Visa Card is taken into consideration. (not included in the LVR calculation) The lender will allow you to use the Secured Credit Card for the likes of Payment of Loan Application Fees, Payment of Stamp Duty, Payment of Solicitor Costs, any loan fees or purchase costs.
Something I want for you to note moving forward, beware Lines of Credit that start as a Personal Debt on your Principle Place of Residence (PPR), and in the future turns into Investment Debt when you decide to make the property an Investment Property. At the time of this transition, I strongly recommend that you note the balance of all loans and discuss with your Accountant your cash flow scenario, as you do not want to ever mix Personal and Investment Transactions in a Line of Credit, the ATO do not like it and you may find that you turn Investment Debt into Personal Debt when it is an Investment Property by doing so.
In the above scenario I would look at maximizing the offset with my cash flow, and in the future looking at any savings/cash in the offset to move into further property transactions, and leave the Line of Credit as is.
Please note that I am neutral with the loan product offered, as it does come down to the client and their personal circumstances.
We assist a lot of clients in forming a Strategy, and this should always be considered very early in the process, usually before finalizing a loan structure to make sure that you will achieve what you want to achieve in the future.
I hope this is not confusing, but if so, please do not hesitate to ask any questions.
Regards Grant
HI Sam,
My apologies on the Superannuation amount. I have attached another link that may help, I could not access the docs on the ATO website either.
http://www.macquarie.com.au/dafiles/Internet/mgl/au/docs-pa/articles/smsf-from-set-up-to-wind-up.pdf
Regards Grant
HI Sam,
With your Superannuation amount to date being $60k, and using this to purchase a property in a SMSF should be approached with some caution. It is being discussed by many in the SMSF industry that the ATO and ASIC have an interest in SMSF's being set up to solely invest in property without any other diversification within the fund. The other costs that people do not think about is the Insurances needed in a SMSF, especially if there are between 2-4 members. (4 is the maximum). If there is say 2 members in the SMSF and one of these members unfortunately passes away, and there is no insurance in place, there is every chance that the property will need to be sold. Insurances provide a SMSF liquidity and can be paid from the SMSF.
In saying this, a SMSF is a great opportunity to manage your investments for Retirement. I have attached a number of links from the ATO to hopefully help you to understand what is involved in a SMSF.
http://www.ato.gov.au/content/downloads/spr00182491n72579.pdf
http://www.ato.gov.au/content/downloads/spr00162377n71454.pdf
http://www.ato.gov.au/content/downloads/spr46427n11032.pdf
http://www.ato.gov.au/content/downloads/spr00182478n71923.pdf
http://www.ato.gov.au/content/downloads/SPR00352279.pdf
Regards Grant
Hi Ben,
There is a feeling in the market at the moment that the RBA will look at another 25 basis points drop in the near future, what does this mean to the Lending Institutions?
The Lenders have not historically always forwarded the RBA reduction to consumers, so it is always an unknown until it happens. As Jamie pointed out, there is more to Fixing Rates, and as Josh asked, what is your Strategy as this is important to understand so that you structure your finances to succeed, not hinder your strategy moving forward.
Interest Rates have never been this low for many years, the only time I saw a lower rate was with Westpac at 3.99% Fixed as a ploy to get market share a few years back, this was not advertised but offered through brokers.
Regards Grant
Hi Michelle,
I have a number of scenarios I think are worthy of consideration, but there needs a little more understanding of your circumstances. Some further questions;
1. Are any of the loans Fixed?
2. Are there multiple Lenders, or just the one, who are they? There are interest rates in the market place now that are under 5% in the Fixed Interest products,
3. What is the income you feel that you need in your travels?
4. Is there any chance or possibility that you would return to work after traveling?
In addition to the above, dependent on your answers I am sure there will be more questions. Something that I would recommend is that after your feedback you also consider talking to a Financial Planner.
We are always open for a no obligation chat if you would like to do so,
Regards Grant
HI,
The only time that I have come across changing the locks is when one of my Tenants moved on, a new Tenant moved in and within the first two weeks the Police arrived on the doorstep looking for the old Tenant! The kind and concerned Policeman suggested that the Tenant change the locks, At a cost of $240 we changed the locks immediately. Happy Tenant and no issues from there on.
Regards Grant
HI,
I agree with Jamie, seek legal advice and dependent on the State the house is in there may be different outcomes, but I would also suggest calling the State Revenue Office and ask them directly.
Cheers Grant
HI,
Have you completed any costs analysis and a feasibility on what you are trying to achieve. A lot of people fall into a trap when renovating with over capitalizing and not getting a return on their money as anticipated. What are you trying to achieve out of the renovation, increased equity, more rent as a 3 Bedroom, or is the property that pre-loved that it just needs updating?
As an IP don't fall in love with the renovation, fall in love with what your return is going to be! Do the numbers and then work out what you need to do to get the return you are after.
Regards Grant
Hi Tanya,
I suggest your first visit should be to your local council, and talk with the Building Department to see what can be built on the site, and to also check if there are any easements that may hinder your ideas (restrictions on where you can build on the block, common easements are storm water drains, sewerage or underground power), along with any covenants as well.
Dependent on size and finishes, the averages we see would be between $1000-$1300 per square meter to build, but there may be additional costs with preparing the site, along with costs to Strata Title as well. It is a very open answer but hopefully this gives you some information to begin with.
Cheers Grant
Hi Richard,
Thanks for your comments. I was more alluding to the fact that there are companies out there that have pre-approved Trust Deeds, such as SuperFund Pro for most lenders.
My thoughts are if you are looking to set up a SMSF for the purpose to include property utilizing an Limited Recourse Borrowing Arrangement, that there should be as much pre-approval due diligence as possible completed prior to the cost of generating Bare/SMSF Trust Deeds along with Corporate Trustee/Company entities.
Bottom line, engage professionals as you have pointed out Richard who have experience, and also make sure that someone in your Professional team has the ability to Project Manage the process.
Regards Grant
