Hi Siewlin

How are you funding the deposit/costs? Are you using equity or cash?

I prefer to look at the entire cost of the deal to determine whether it's CF+ and generally try to use borrowed funds over cash for IP purchases so the entire purchase plus costs remains deductible.

So in this instance, if the property was purchased for say $250k – and I allowed another $12k for costs (rough estimate) than I'd be basing my interest repayments on a loan of $262k which annually would be around $13.5k. So after ALL costs – I wouldn't consider this to be CF+ 

Also include insurance, property management and maintenance.

Cheers

Jamie

Yep, I also used AAMC – for both the cert IV and diploma. Have no complaints.

Cheers

Jamie

http://www.mfaa.com.au/default.asp?menuid=619

Cheers

Jamie

I had one carried out on an IP recently.

I think if it's anything to do with gas or electricity and it's being advised by your PM that it should be done than I'd be inclined to do it – it's not something you want to risk.

Ask the PM to point out specifically where it states that it's a requirement.

Cheers

Jamie

Hi John

Welcome aboard.

Not sure why it's costing thousands to restructure your finances to set you up to purchase your investments.

For a finance point of view – it shouldn't cost thousands to set up. Unless it's an external refinance to another lender and your outgoing lender has extremely high exit fees and/or break costs.

Where are these fees coming from? Are you looking to set up some sort of trust structure?

Cheers

Jamie

Hi first timer

Welcome aboard

The way we generally structure these types of scenarios is to tap into equity against the PPOR – and set it up as a separate loan (either an interest only loan or a line of credit). We then arrange a separate loan to cover the remaining balance for the IP.

So it ends up looking like this.

PPOR

Loan 1: Current loan against PPOR

Loan 2: Equity release against PPOR to cover deposit/costs on IP

IP

Loan 3: Separate loan to cover the remaining balance on IP

Depending on your longer term goals, you might want to use the equity release from loan 2 above to stretch over multiple deposits. A decent broker will be able to run through some options for you.

Cheers

Jamie

You'd probably have to arrange a separate valuation for stamp duty purposes.

Cheers

Jamie 

Hi Nathan

What's the main purpose of the refinance?

Do you need to refinance to another lender? Any reason why you can't revert to IO with your current lender?

Cheers

Jamie

Hi Daniel

I agree with Josh on this – the best person to seek advice from is your solicitor. Unfortunately most OTP contracts are water tight and very difficult to get out of – hopefully they can discover a way.

Cheers

Jamie

1. Yes, it's possible and happens quite a lot. I just helped a first home buyer purchase her parents home for $100k less than market value. It's called a "favorable purchase" and the bank will go off the valuation of the property (rather than the purchase price) to determine the Loan to Value Ratio (LVR). So for the person that I just wrote a loan for – even though she had a small deposit, she was able to avoid paying any mortgage insurance because she was purchasing the property for $100k less than it was actually worth.

2. lol – I'll leave that one to you! 

Cheers

Jamie