Forum Replies Created
- Scamp wrote:mpertile wrote:And the price of oil (and petrol) is so high, why? Because there's a shortage on the world market…
Wrong. There's plenty of oil. Speculation drove oil prices up , not 'shortage'. Basically, the exact same thing that happened to housing. Speculation drove those prices up also, not shortage. There's no shortage of housing in Australia. There's no shortage of oil in the world.
Anyway, RBA will not lower interest rates upcoming week : Keep dreaming.
Scamp, do a bit of research and you will find you're incorrect on both counts. The middle eastern oil producers/suppliers recently met to discuss increasing supply to help meet the extra demand from oil hungry China and India. Also, there have been many reports on the fact that there is not enough real estate being build it Aust to match the demand, especially in capital cities…
By the way, i think interest rates will go down, but whether or not the banks pass that on might be a different story. At least if the RBA lowers interest rates, and if the banks don't pass that on, then they're very unlikely to go up any futher, unless the banks want a full – scale riot! Can you picture that, RBA lowers interest rates, banks then raise interest rates…I can't.
Regardless, these announcements of interest rates possibly coming down is a more positive tone than we've had for the last year or so, which can only be good news for the property market and us investors.
Don't forget that the USA is fighting a war they can't afford to fight (averaging about $90 billion per year for the last 6 years, with an estimated flow on $2 trillion cost to the US economy), so there are other factors at play other than interest rates with the economy in the US. Australia's govt is using it's money more wisely, hence we are in a better economic situation.
Also consider this – Iraq has the second largest supply of oil in the world, second only to Saudi Arabia, which hasn't been put to good use due to the war. And the price of oil (and petrol) is so high, why? Because there's a shortage on the world market…hmmm I wonder what's causing that???
I think the global economic situation will get better when the US pulls out of Iraq, so let's all hope the next US president isn't white – hint, hint…
Do they have this in QLD – can't seem to find any info on the net about this being offered in QLD, so I am assuming not, but thought it wouldn't hurt to ask
I was looking at this option in buying a PPOR, but it's no worth it unless the trust is making money aside from your PPOR, as you can't negatively gear in a trust. If the trust is making money, then it's probably from other assets and as mentioned before in this topic, you don't have the asset separation – you could pay rent to the trust to cover all the costs, but then you've got the catch 22 o having to pay CGT whn you sell.
JL – I see your point, let's say we added to this example a method of having the the $7k FHOG means tested, so that in an example like yours the initial assistance is there in extreme cases, but as yarpos said, the bulk of people are in the middle, and allowing them to tax deduct their interest would be much more financially beneficial than $7k upfront. For example, where I live on the gold coast, the average house would be about $400k – $450k. The annual interest on a $320k loan (80% of $400k) is about $28k per annum. Getting 30% (obviously depending on the tax bracket) of that back per year (about $8.5k) is much more attractive to me than a measley $7k upfront, which doesn't really make any dint at all in the $80k deposit!
If I use my own personal circumstances as an example, I currently pay $375 per week in rent at my PPOR (I have investment properties, but I rent where I live at the moment). Using the figures above, I could then buy a $400k home, and if I were able to tax deduct the interest, ($28k-$8.5k = $19.5k/52 weeks = $375 per week!) I would then be paying as much in interest as I am currently paying in rent. This would make it more affordable for me to buy my own place, and as a trade off I have no issue in paying capital gains tax to do so.
I just don't see how this won't work!
Hmmm….that's a good point in regards to the rich taking advantage of this, but I don't see how it's a worse deal than present for those on low incomes? Please elaborate….
all quetions answered here:
Don't forget that wages are alot higher in the UK also. A job that you're paid $50k here would have a wage of about ?50k over there (of course this is not always the rule, but pretty close). The Aus dollar is worth about 48pence at the moment, making salaries in the UK about double what they are here. That being the case, you would have to look at what you can but there for ?300k to get a proper affordability comparison. Also, anyone who's been to London knows how great their tube system is, so with public tranport being so much better there than here, you wouldn't need to live so close to the city.
The only one who has proven themselves a mug is badger himself – Badger, why waste your time typing dribble?
How, 200k equity on a 440k property ain't bad. Sounds like good advice – but make sure you DO NOT NEGATIVELY GEAR! You may be sold the benefits of "saving tax", but remember you only save tax when you lose money! (for example you spend $100 on interest and you get $40 of that back in tax – you're still $60 behind). Do your numbers and buy a sure thing – do not speculate, as speculating is gambling, not investing. Educate yourself – people go to uni so they can get a job that pays 50k p.a, but then they try to make 100k out of the property market without learning a bit about it. Read books, I have founds Steve McKnights books the most helpful of all the ones I've read (and no, I don't work for his marketing dept). they are available on this website…
Scamp, your kind of input doesn't help anybody, maybe except for yourself.
Do you feel better about yourself now that you've put someone else down?
I asked the commonwealth bank about how much expected rental income they take into consideration when calculating serviceability, they said 80%, does this vary from bank to bank?
This is pretty standard, unless you want to pay mortgage insurance, but remember, this is 80% LVR of your PPOR and your investment property put together…I just reread this and noticed that I didn't read your question correctly – I thought you were talking about the loan to value ratio – sorry if this confused you..
I don't actually know what the standard is for this.How much does it cost to have my property valued, I understand that a bank can appoint one on there behalf or I could get a private valuer, is this correct?
Speaking from personal experience, all I have to do is tell my bank I am looking to buy another property and that I want to use my current property as security and they'll go out and value it (at no cost to me). You could have it valued independantly, but that will probably hold no weight with the bank as I'm sure they would want to value it for themselves anyway."The bank will only take into account the purchase price on the contract as marked price, no matter how much the 'real' market price is."
Can someone please explain this to me, just can't seem to get my head around it.
Also speaking from personal experience, I have bought some property at a lower price than where the market was at, but the bank would not value it any higher than the price I had bought it for. As far as their concerned, I am the market (seeing as I bought it), and the contract price is the value, therefore the contract price is the market value…I asked the commonwealth bank about how much expected rental income they take into consideration when calculating serviceability, they said 80%, does this vary from bank to bank?
This is pretty standard, unless you want to pay mortgage insurance, but remember, this is 80% LVR of your PPOR and your investment property put together…The second stage would be to
1. Pay down as much on our home loan as possible to create more equity
or
2. Save up cash in the bank for a deposit
or
3. A bit of both
Of the options above what is better for us?
I would go option 2, and set up the bank account that you use for savings as a mortgage offset account against your home loan, as this will have the same interest saving effect as paying it into your mortgage, but also give you liquidity of funds as you would be able to access that cash at any time (say as a deposit on an investment property). Having in an account also still in a way gives you equity, because if you needed to, you could dump in into your home loan at any time…but once again, what you do is up to you…If I was to find a Really good deal on an investment property would the banks be more inclined to approve finance? Eg. I found a foreclosure for 250k worth 500k
The bank will only take into account the purchase price on the contract as marked price, no matter how much the 'real' market price is. You really need to try to get yourself into a position where you have a 20% purchase on a property. First step is to have your PPOR revalued to see how much it's really worth (your bank will do that) and see if you can borrow against that value. In today's market I wouldn't gear myself to more that 80% though.Another more drastic option would be to sell your PPOR, find a house to rent, and use the profits from the sale for investment property – though don't make this decision based on my comment – I'm merely flagging the idea!
Try a Joint Venture agreement, which basically sets him up as a partner to the investment and you can then nominate whether it's a 50-50 split, 60-40 split of profits and costs etc. Talk to a solicitor who knows this sort of stuff and they could draft an agreement for you. As far as the titles office and your lender is conerned, the title will still be in your name, but the JV agreement (which you have no obligation to tell the titles office or your lender about) then brings your dad in on the investment, so there is no stamp duty trigger etc…
This JV agreement as previously stated make you and your dad partners in the investment. Therefore, if for example you worked it on a 50-5 split, if the property were to make a loss, you and your father would share that loss equally, as is written into the contract. If it made a profit, you would share the profit – including the capital gain when time comes to sell. This is all done at tax time. When the partnership return is done, the income is allocated 50-50 to each of you and you then claim the income (or loss) on your individual personal tax returns.
I agree fully with Mick. If the seller won't negotiate and you don't think the property is worth what you are paying – walk away
My advice is to buy property that you know is a good deal and a good investment in today's market, not based on what might happen if there happened to be a boom, especially in today's market. You make money on a property when you buy, not when you sell.
I guess check with your solicior and see if they can demand that you not advertise it, if they can, then unfortunately you have to cop it. If not, stand your ground and keep the ads running, it's not like they can pull out of the sale!
I don't actually know what the standard is for this.
