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NM7
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@nm7
Join Date: 2010
Post Count: 45
April 3, 2012 - 12:27 am
Terryw wrote:
Are you saying you borrowed money and parked it in an offset account?
Hi Terry,
As mentioned, I use the loan secured against my PPOR as a LOC and fund 20% + extras (eg. stamp duty, etc). The PPOR loan does have an offset account and I dump all our incomes into that offset account to reduce the interest payable on the PPOR loan (which I know is deductible but why pay more interest on it if I can reduce it).
Regards,
Nish
NM7
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@nm7
Join Date: 2010
Post Count: 45
April 3, 2012 - 12:04 am
Hi Jamie & Terry,
Thank you kindly for your insights. It surely does place the picture in perspectives.
I basically don’t have any non-deductible loans & have used the loan against my PPOR which has an offset account as a LOC.
This loan is only used for investment purposes (eg. 20% deposits for other IPs, renovation costs for IPs, etc). Our monthly salaries are deposited directly into the offset account (as I don’t have any other non-deductible loans) and parked there until I find good use for it.
All my other IPs, I’ve taken a loan of 80% against the individual IP as security as I was advised that it best not to have cross-collateral loans. My only doubt is that when I use funds from the offset account for IP related expenses; do I really have to move the funds into the PPOR loan (which is an Investment Purposes loan) & do a withdraw of it? Being with CBA, minimum withdrawal amount is $500 & many times I have very small IP expenses which I transfer out directly from the offset account (which increases the PPOR loan & hence has the same effect of drawing it).
I do hope you understand what I’m trying to explain & let me know if I’ve not been very clear. Once again, appreciate your expertise advice as usual.
Cheers’
NM7
NM7
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@nm7
Join Date: 2010
Post Count: 45
April 2, 2012 - 11:54 pm
That’s pretty good rates in my view …. I’ve got a couple of IPs (none regional) & have chosen local agents to manage them as they know the area and based on history, managed to keep my vacancy rates low. Overall, I pay around 5.5% management fees, 1.1 week leasing fees & no other costs for advertising or rental summary statements (both monthly & yearly as I’ve chosen email option).
However, I believe in “you get what you pay for” and hence would be sceptical of an agent lowering their fees just to get you through the door. It may be worth asking for some reference from them too …. all the best
NM7
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@nm7
Join Date: 2010
Post Count: 45
April 1, 2012 - 8:23 am
Jamie M wrote:
It does provide flexibility but if Dreaming Big is looking to tap into equity in his PPOR to use it towards an IP purchase, it might not be best to use the funds from the offset (because it won't be deductible).
If he/she thinks that their current PPOR might become an IP one day. Then it should be set-up as interest only with an offset now (I don't know if this is their intention – just a general statement).
Cheers
Jamie
Now I’m confused !!
Jamie – you mentioned that using funds from offset is not deductible & from the forum, it sounds like I need to move it into the loan before using it for investment purposes (eg. deposit for an IP or renovation cost for an IP). What happens if I have an offset account which I’ve withdrawn funds for renovating an IP directly without moving the funds into the loan & then withdrew it from the loan itself … does that mean this amount withdrawn is not deductible?
Apologies if I’m not asking the right question but your statement has got me a little confused. Appreciate some insights to this matter.
Regards,
NM7
NM7
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@nm7
Join Date: 2010
Post Count: 45
November 20, 2011 - 11:24 pm
Terryw wrote:
NM,
I wouldn't like to say too much public, but you could have utilised a dsicretionary trust and possibly a post death testamentary discretionary trust depending on the circumstances.
Thanks Terryw – I'll look more into it
NM7
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@nm7
Join Date: 2010
Post Count: 45
November 20, 2011 - 11:05 pm
Terryw wrote:
Hi NM
I just read your other post about the inheritance. You could have structured this much better by utlisiing some asset protection techniques and could have possibly set it up more tax effective too. Still doing well though.
Hi Terryw,
Thank you kindly for your feedback and would appreciate your thoughts on asset protection and tax effectiveness. Do you have any specific steps that I could take?
Regards,
NM
NM7
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@nm7
Join Date: 2010
Post Count: 45
November 20, 2011 - 10:41 pm
While I agree that there are some good lenders offering good rates with no fees, I would suggest doing some due diligence to ensure you aren’t getting a bad product. I highly recommend using a Mortgage Broker rather than testing the waters with some online lenders which lure you to attractive rates but have poor customer service & in the long run, you could end-up with higher rates and high cost to refinance. I have had a bad experience with Pacific Mortgage Group (http://www.pmgonline.com.au/) and would suggest that you are careful with your options.
NM7
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@nm7
Join Date: 2010
Post Count: 45
November 20, 2011 - 7:42 am
I’m no expert in these matters but I’ve got 4 properties currently (1 PPOR & 3 IP) whereby I’ve taken loans (secured individually, no cross collateral) from couple of lending institute. I’ve recently re-valued my PPOR and another 2 IP to top-up 80% LVR for equity access. My PPOR is fully paid-up but I’ve taken 80% loan against its current value which is used to fund 20% and extra costs for investment property purchases (eg. stamp duty). This loan I refer to my “Invesment Loan” which acts as my LOC.
I take up 80% loans for each of my IP and fund the balance amount from my “Investment Loan” until my IP grows to fund future IPs. I’ve taken the option of offset for each of my loans so that I can have the flexibility of moving extra available funds into the offset of the loan that has the highest interest rate currently. I keep track of these through a simple spreadsheet I’ve created.
All my income comes into the offset of my “Investment Loan” whereby the funds are parked there until I need to make monthly interest payments for the other IP loans as well as my regular expenses like my credit cards / personal expenses. Keeping funds in offset ensures that I minimise the interest payment for the loans while having the flexibility to use the funds for personal use as & when required as I’m not drawing it down from the loan itself.
Cheers’
NM
NM7
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@nm7
Join Date: 2010
Post Count: 45
November 20, 2011 - 7:11 am
I’ve been in a similar boat whereby I inherited a decent pool of money from overseas. I used the funds to pay-off my PPOR and the balance was parked in an offset account for an investment property. That way, while I’m planning for my next investment move; I get to lower down the interest I pay on the investment property (after having nil interest paid on nondeductible debt) without paying off the principle amount.
Cheers’
NM
NM7
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@nm7
Join Date: 2010
Post Count: 45
October 25, 2011 - 3:11 am
camjanice wrote:
I use bankwest. Rate is 6.85% (no honeymoon) with no annual fee. At the time I took out the loans there were no application fees and 100% offset account with a minimal monthly fee. Only problem has been bankwest was slow to process my loans and I was late for settlement two out of two times! Living in remote WA didn't help.
Hi camjanice,
I know what you mean with Bankwest being slow as we had similar issues with them & I forced them to cover the penalty cost for the settlement delay as well as provide me an additional payment as compensation … was a hard battle but I managed to win finally. I’m looking at moving out of my Bankwest loan (currently on 6.78%) and consider going for 2 years fixed with Citibank at 6.25%. Citibank has a special of $1000 cash back as well to cover any exit cost from BW & legal cost for the new loan.
I recommend you contact Michael Chan on [email protected] as I had some recently chat with him & found his services to be very prompt and useful.
Cheers’
PfP
NM7
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@nm7
Join Date: 2010
Post Count: 45
October 24, 2011 - 11:54 pm
EPI_Den wrote:
propertyboy wrote:
EPI_Den wrote:
I'm with Commonwealth Bank and I recently negotiated a further decrease on my loan. I'm now on 6.61% which I think is 1.14% below their standard variable rates. I'm happy with this but it's not out of the question to fix part of it if I see a really good deal! Den
How did you negotiate this? Do you have significant amount of debt with them and high income?
Hi mate,
Really I just shopped around a bit and then went back to CBA. I have a significant amount of debt (and over 10 investment properties) but not a large income. I might write a blog about it and let you know where to read it.
Don't be afraid to shop around!!
<br /:)” title=”>:)” class=”bbcode_smiley” />
Den
Hi Den,
Thanks for the update and could I ask if you have all your properties crossed in order to get the 1.2% discount?
Look forward in reading your blog about it and thanks for the advise about shopping around.
Cheers’
PfP
NM7
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@nm7
Join Date: 2010
Post Count: 45
October 20, 2011 - 5:55 am
Hi all,
Just wanted to share the news that I got CBA to provide a 1% discount on current variable (hence at 7.81%) which is good as I previously only had a 0.8% off. I’ve spoken to a couple of brokers including Michael & will wait to see what options I do have particularly in the fixed world before making the next move.
I fully agree with Richard that we can’t just look at rates alone but the whole product being offered, hence I wasn’t going to move my primary banking that I’m doing with CBA at the moment. The aim was to get the best rates for the other IPs I have but will wait for Cup Day at least to see where rates will be moving.
Does anyone know if CBA will offer a better than 1% discount if I bring more business to them (i.e. move one of my IP loan over to CBA variable)?
Regards,
PfP
NM7
Participant
@nm7
Join Date: 2010
Post Count: 45
October 20, 2011 - 5:49 am
Hey Marie,
Fixed rate of 5.2% is very good in my personal view as most fixed are currently around 1% more than that. How long is your fixed & whom are you with? For your info, I’ve got a couple of loans with CBA @ 6.81% (just got the 1% off today), another with Bankwest @ 6.78% and another with Adelaide Bank @ 6.74%.
Currently, am in the market to refinance my Bankwest loan as the exist cost (inc. gov & discharge fee) is around $480 and may go for a 2 year fixed at around 6.25%.
Cheers’
PfP
NM7
Participant
@nm7
Join Date: 2010
Post Count: 45
October 17, 2011 - 5:52 am
Hi All,
Just wanted your thought on 6.25% for 1, 2 or 3 yrs fixed with Citibank … no application charges, Citibank covers $500 cost for valuation & currently also offer $1000 cash back for taking up the offer. I currently have an investment loan with Bankwest on 6.78% with no exist fees. Question is – historically, how low has fixed rates been in the past as I’m quite keen in taking up the offer for 3 years as in the long run; I don’t foresee rates to be sub 6% … your view pls.
Cheers !