Forum Replies Created
- PaulDobson wrote:
"The answer to your question is a technical one – there is no assignment of property in an instalment contract. What happens is that the vendor is entering into a Contract for Sale. It is only on completion that an assignment (known as a Transfer) takes place.
An Instalment Contract is a Contract for Sale with a delayed completion.So Paul,
Does this mean that we would pay stamp duty at the time of transfer (in this case 6-7 years into the arrangement). It would be handy for our cashflow at this time if this were the case.
So.. just made a quick spreadsheet to rough out some figures.
Doing this purely on interest only terms to keep it simple, at a 60% bank loan and 40% vendor finance it would take 7 years to reach the equity needed to be able to refinance the loan to pay out the vendor. I'm assuming a 10% growth rate which is appropriate for the area.
I dont see the value in this for the vendor apart from some regular income and selling a property that has been on the market for a couple of years.
We are maxed out in available equity on two residential IPs, but would have more equity in five years to throw at the business property if needed. I just wanted to keep our private investments away from the business.
Soo much to learn…
Thanks Scott on the GST timing – useful tip.
Thanks Paul, not quite sure how this works so pardon my naivety…I don’t understand how a 5 year term I/O, amortized over 25 yrs with the balloon payment works?
Do we have to assume that the value of the property has increased sufficiently in this 5 years to be able secure the combination of the two loans with the bank at 60% LVR, and using the increased equity to refinance and pay out the vendor?Thanks
Max
