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  • Profile photo of Paul B.Paul B.
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    @paul-b.
    Join Date: 2013
    Post Count: 70
    February 13, 2014 - 11:42 pm

    Hi Tom,

    If I was you I would focus on choosing subjects you enjoy during high school. You will be confronted with many distractions in your last couple of years (many alcohol related) and your motivation to focus on studies will be challenged. If you are enjoying school you will be more inclined to devote time and effort and this should manifest itself into decent marks and improve your options for going to Uni/TAFE etc. I feel that your education doesn't really gain momentum until you graduate from Uni/TAFE and get thrown into the workforce.

    There are many components of property development and it is very hard to be across all fields. I would suggest focusing on a particular aspect and become proficient in that field.  While working in your chosen field, network and make contacts in other relevant fields. You can then rely on these people (many you will meet during Uni/TAFE) to strengthen your postilion as a property developer.

    I undertook a Town Planning Degree and work as a Strategic Planner for a local Council. Directly and indirectly through my work, I rub shoulders with Councilors, developers, engineers, marketers, scientists, architects, administrators, real estate agents, mortgage brokers, bankers and solicitors which I consider potential resources to assist me in my ambitions as a property developer.

    Profile photo of Paul B.Paul B.
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    @paul-b.
    Join Date: 2013
    Post Count: 70
    February 13, 2014 - 10:42 am

    So I found out my partner's friend from school is a successful mortgage broker and got some great advice.

    NAB came to the table with a very competitive rate of 4.92% for our PPOR loan (previously 5.08%) and the Investment loan (variable IO)

    Structured as follows:

    Loan 1: $310,000 (PPOR, P&I)

    Loan 2: $50,000 (Deposit, IO)

    Loan 3: $297,000 (Investment Property, IO)

    This is assuming a purchase price of $330,000 on investment property.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 11, 2014 - 9:59 pm

    Thanks guys.

    I will follow up KLM. Cheers.

    Profile photo of Paul B.Paul B.
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    @paul-b.
    Join Date: 2013
    Post Count: 70
    January 11, 2014 - 9:57 pm
    TheNewGuy wrote:
    Hi Paul. Good luck, and let us know how you go. I'm definitely interested to know what happens, particularly if you stay with the NAB.

    Also, the $395 fee is per annum, so if you do stay make sure you get it put on a tax deductible account.

    Oh my mistake. Excellent advice. Cheers :) I will let you know how it goes

    JacM wrote:
    Don't think of it as swallowing your pride Paul – think of it as making a smart decision to surround yourself with seriously clever people who know their stuff.  Leveraging their abilities will take you far smiley

    Thanks Jac.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 11, 2014 - 11:57 am

    Yeah I may have to swallow my pride and seek help. Thanks for the interest guys!

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 11, 2014 - 11:04 am

    The more I think about this, the more I am getting confused. Let me lay out the figures…

    PPOR Value: $400,000

    PPOR loan balance: $310,000

    Equity @ 90% of PPOR value:  $50,000

    Pre approved loan: $350,000

    LMI: $6800

    Can someone make sense of this?

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 11, 2014 - 10:55 am

    The NewGuy:

    1. agreed

    2.Now my understanding from the meeting was that I don't pay interest on the equity. Why would I pay interest on money that is essentially already mine (i.e. not borrowed)? The way I see it is that the equity is already mine; I am using it to pay a deposit and cover fees on another loan.

    Yes we are paying 5.08%

    The $395 fee was already paid at the commencement of my home loan.

    3. The IP loan would be at 90%LVR therefore I am incurring the $6800 LMI.

    4. See point 2. I dont see how a third loan is justified?

    Profile photo of Paul B.Paul B.
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    @paul-b.
    Join Date: 2013
    Post Count: 70
    January 11, 2014 - 9:36 am

    Thanks everyone for the advice. The key things that were discussed in the meeting:

    1. Regarding LMI, I was told I am not paying the full amount. I am only 'topping up' the existing LMI payment to cover the additional borrowings. Does this add up? does $6800 seem right?

    2. I was reassured that it was not cross-collateralised. The IP loan would be an interest only loan independent of the home loan but within the same 'choice package'.

    3. I was reassured that it was typical practice to award the full amount of the equity. I explained that I thought the banks would only recognise a percentage of the equity to cover themselves if the market drops or the valuation was inaccurate. She looked at me like I was speaking latin.

    4. I queried about the 3 loan structure, and againn, she looked at me peculiarly. She advised that the equity was not a loan, but it was 'security' for the bank to secure the addtional loan.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    January 11, 2014 - 7:23 am

    Her explanation on the LMI is that the original LMI payment covered the original loan and I will need to pay additional LMI to cover the increase in borrowing brought on by the new loan.

    Thoughts?

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 11, 2014 - 7:21 am

    I asked if this was cross collateralising and she informed me it wasn't. She said they are two separate loans and the original loan will not be affected. The bank is NAB.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    January 11, 2014 - 6:17 am

    Ok so went and talked to the bank. Some interesting outcomes:

    1. The bank is willing to release 100% of the equity.

    2. There was no credit on LMI (I will be charged $6800 on a $350,000 loan)

    3. There will only be two loans. The release of equity is not treated as a loan.

    Thoughts?? I was pre approved for $350,000.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 9, 2014 - 10:38 pm

    Awesome thanks for your help

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    January 9, 2014 - 10:25 am

    Are you coming down for business or pleasure Richard?

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    January 9, 2014 - 10:19 am
    Jamie M wrote:
    Hi Paul

    PPOR

    Loan 1: Your current PPOR loan

    Loan 2: Equity release against PPOR to cover deposit/costs on IP (can be an IO loan or LOC)

    IP

    Loan 3: Remaining balance for IP

    I am picturing something like:

    Loan 1: Existing loan on PPOR (variable P&I w/ 100% offset)

    Loan 2: Equity release against PPOR (circa $40,000 interest only) – are the loan features the same of a standard homeloan?

    Loan 3: New loan on Investment Property (circa $300,000 interest only)

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 9, 2014 - 10:05 am
    Qlds007 wrote:
    I would also ensure your Banker structures the loan in such a manner to enable you to buy another IP when you want.

    There are a couple of products that might let you have your cake and eat it at the same time.

    Cheers

    Yours in Finance

    Would the structure suggested by Jamie M achieve this?

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    January 8, 2014 - 6:27 am

    Hi Shahin,

    Yes we did pay LMI for the PPOR. Does this have implications?

    The valuation was a bank ordered valuation.

    I will have to discuss with the bank the ins and outs of LOC v Standard loan.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    January 8, 2014 - 5:10 am

    Hi Sampson,

    I did a similar thing with Alan Fox from Propertunity. He was very helpful however he is very time-poor so you may struggle to catch him. Worth a shot regardless :)

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    May 2, 2013 - 3:23 am

    Thats disgraceful but you need to be on top of managing tradesman. You need to make sure 110% they know what you expect and what the scope of works is. I hope you didn't pay them until they fixed it up! 

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    May 2, 2013 - 3:17 am

    I find it a lot easier to paint the frame (with some overstroke onto the wall) and then cut the wall in to the frame. If you do it the other way around then you are attempting to paint the frame edging (usually less than an inch wide) without overstroking onto the wall and this is bloody hard.

    Profile photo of Paul B.Paul B.
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    @paul-b.
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    Post Count: 70
    March 26, 2013 - 1:29 am

    Call your local Council and ask if it would be permissible.

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