Forum Replies Created
Who or what is the UCCC?Hi Kirby,
UCCC stands for the Uniform Consumer Credit Code. It deals with finance predominantly for individuals or strata corporations who obtain the finance for personal domestic or household use, with the term of the finance arrangement being more than 62 days.
Happy investing [
][]Cheers,
Nathan.
Hi Quasi,
As Paul mentioned, this is a requirement! You may want to send out a statement every 3 months, as the UCCC requires one atleast every 6 months. If you send one every 3 months and there is a problem with a statement then it gives you time to correct it within the 6 month period. If you send one only every 6 months there is no room for error.
Cheers, [
][]Nathan.
it is my understanding that once stamp duty is paid on a loan if you have it refinanced you are not liable for stamp duty a second time
Hi the B,
The awnser is yes and no! It all depends on the way your refinance is handled. This is usually in the hands of the solicitors of the new institution. Some of them will ‘transfer’ the stamp duty to the new mortgage, while others do not, leaving you to pay it a second time.
Make sure that you ask this of your financier when considering a refinance. Good financiers will arrange the discount for you[
][].Happy borrowing & investing!
Cheers,
Nathan.
Everyone talks about refinancing when buying another property.
What is the advantage over refinance as opposed to obtaining a 2nd mortgage? I thought a second mortgage would be better as it does not increase your loan repayments – only obtains additional equity as security for deposit. OR Am I missing something altogether?Hi Essykay,
To the best of my knowlege, there are 3 traditional methods (not including creative financing) to access equity in one property in order to leverage into another property.
1) Refinance – which you have mentioned. Useful if your origional institution is not compeditive in a relative sense, or cannot provide the type of product you need. It can also be useful for cross-linking of properties etc.
2) An additional loan (or top up) Usually less costly than a refiance, as you are just adding to your loan & not creating a new one.
3) A second mortgage- not usually the preferred choice as interest rates are not usually as compeditive as a first mortgage.
By accessing the equity in your property, you are borrowing more against it, and hence there will be associated payments with the extra borrowings.
Depending on your needs/ strategies/ position each of these are viable alternatives, but if you are borrowing money you have to service the debt in some way. If you have found a way around this I would be very interested.
Cheers,
Nathan[
]Thanks very much for you post Steve, your prompt has given me the awnser I was looking for.[
][]Cheers,
Nathan.
Thanks for that Steve, sounds like a great investment – you would really have to do your reasearch though!![
]Quote:Anyway, I think my post came across from the wrong angle. It was supposed to be a round about way of saying ‘do the banks care where the 10% deposit goes/comes from?’ ie: if you can negotiate with the vendor to ‘forgive’ or ‘refund’ your 10% deposit will the banks care if you have none of your own money in the deal if it still meets their lending criteria?
Hi Leigh
At the 10% deposit level, it will depend on whether the mortgage insurer goes for it or not. Under full disclosure conditions and with a full market valuation that comes up to scratch, this has been done. You will have a better chance of success the larger your deposit, and therefore the lesser the risk for the institution. It will also depend on the other strengths of the finance application (your asset position, length and stability of your income etc).
On a slightly different note, I have seen many loans approved where there is full disclosure of the property in question being purchased under market price with the reason being explained (and to the satisfaction of the lender), with a letter from the vendor to the purchaser saying something like “I am selling this property to the purchaser at x amount. Any value above this price is a non-refundable gift to the purchaser”. The contract to purchase the property is then drawn up a x amount plus 20% for example. This is explained to the lender, and when the lender instructs the full valuation the true market value is used, and it should match the contract price.
The purchaser will have to pay stamp duty on the market valuation price (which is also the contract price), not what he/she is actually paying for it.
At settlement the purchaser only pays x amount to the vendor, and has 20% euity in the property. The purchaser will still have to cover purchase costs.
Cheers,
Nathan.[
]Hi Bella,
I like to think about using all my resources the best way I can until a better opportunity comes up. One of your stragieies seemed to be paying down your mortgage until it would be positively geared when you rent it out.
Steve uses the 11 second rule as part of selecting properties which are suitable, and give a good return on investment. If you have to use too many of your scarce resources to make a property positively geared then it may stop you achieving your goals as quickly as you could.
In your current situation, you have money that is not returning a great investment. So putting it on your mortgage would be a step up. Whether it is the best step you can take is another question. You mentioned that you do have redraw and can pay extra in lump sums. Check to see if there are any charges on paying those lump sums in, but also check if there are any penalties for the redrawing of those funds when you need them.
You also need to know what sort of time frame you are working with for further investments. A lump sum placed on your mortgage may be a good idea for a time frame of 6 months, but may not be such a good idea if there are fees involved, and you are working with a short time frame.
Happy investing[
][]
Nathan
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