Forum Replies Created
Good point about the valuation Derek.
Dellas, as settlement is over a year away, the lender won't approve any loan until closer to settlement. That's when they will also do their valuation, and there might be a chance that the market might drop causing a lower valuation than the purchase price. Depending on what that is, you might have to actually put in more deposit than first thought. You won't really know until late next year.
Cheers
Tom
AJ, just make sure when Christmas comes around, that if you still have the Bayswater property, to restructure your loan to give you the maximum benefit both deductibility wise, and saving for that Eltham property.
Cheers
Tom
Hi Dan,
As Jamie mentioned, IO with offset is the way to go even if you are thinking of turning it into a rental many years down the track. The premise of this strategy is that the principal amount "P" that you would have paid is instead located in the offset account, meaning the interest you do pay is no different than if you paid P&I. The advantage is the extra flexibility of being able to utilise the offset account cash.
If the time comes when you want to use equity in the property to purchase an IP, if as a worst case scenario you have limited equity, you can pay down some of the loan with your offset money, and then re-borrow that for your deposits, etc for the IP to make it deductible.
In regards to a March settlement, Derek is right, you still have some time on your side.
Cheers
Tom
That's human nature for you.
Likewise when I have clients looking for a loan in a hurry, but who aren't too sure about their credit history and I tell them to obtain a copy of their credit report. They would rather wait the 2 or so weeks for the free copy than pay the fee to get it straightaway. So much for the quick turnaround they request!
Cheers
Tom
Just as a note, while bankruptcy will disappear from ones credit file after 7 years, the bankruptcy will be recorded on the National Personal Insolvency Index permanently and the information can be accessed if lenders decide to go that far.
Cheers
Tom
Cross-collaterisation is one of the first points of advice I put to a potential client when they ask why they should use my services instead of going direct to a bank.
A banker doesn't care what they do with a clients loan, as long as they get them to sign on the dotted line. They also play of the fact that most clients are naive, as long as they stick a decent interest rate in front on them, the client is happy without fear of what may happen in the long term as they don't know better. There is basically no recourse against bankers, and once the application is done and dusted, they disappear and the client doesn't hear from them again.
Cheers
Tom
The $60K in that case can be used towards a deposit, however you need to remember that you will also be up for costs such as stamp duty, etc, so if you don't have enough in your savings, these costs would have to come out of the $60K meaning less towards a deposit.
How much of a loan you can apply for depends on a few things, serviceability being one of them.
Cheers
Tom
Well he does have the backing of the marketing machine channel 9 who hold a vested interest in the company. Watched the biased ACA puff piece they did on him and the firm. Grabbing a family who screwed up by fixing their loan at 8.4% and then magically saving them thousands of dollars isn't exactly rocket science. Even a brain dead monkey could have done that. However they made it sound as if YBR were the messiah.
Great publicity blowing their own trumpet, will win them some market share, but a fifth pillar. Please!
Cheers
Tom
No doubting that, but considering how poorly things actually are out there at the moment, and the RBA isn't pulling the trigger knowing they still do have a lot of room to move, one must wonder what it actually will take for them to cut further?
A total meltdown? Financial Armageddon? That would definitely do it. What else?
Cheers
Tom
Hi AJ,
If you decide to rent out Bayswater, your property will be negatively geared. Using your figures, the interest on your Bayswater loan (using interest only which is what it should be if using it as an investment) would be about $395 per week at todays rates.
By deducting expenses such as management fees, rates, water, insurance, etc from your rental, you will get an accurate picture of how much out of pocket you will be. Of course some of this along with depreciation may be recouped come tax time.
As Derek mentioned, do you think that future capital gain/rental will make it worth sticking with, or will it be better to put that money elsewhere now?
I know it's difficult to foresee what may happen in 2-3 years time with your finances, but there is also the question of serviceability and whether you are able to service both properties ($940K+ if you're looking at also borrowing stamp duty costs, etc) if you decide to go down that path.
Cheers
Tom
Macquarie already provide mortgage products to the market. I wonder how different their products will be with this deal.
They are obviously trying to tie themselves with someone with some sort of reputation and distribution network. Though how successful it will be, only the future will tell.
Cheers
Tom
Christos,
The only way money from the redraw would be tax deductible would be if it was utilised for investment purposes.
If you transfer your redraw money to the offset, as per Terry's post, it is not for investment purposes, and that portion of the loan is not deductible.
Cheers
Tom
I agree it would be really pushing it Richard by the settlement date (especially with Murphy's law always seeming to rear it's ugly head), but the vendor might be willing to push the settlement date out without penalty rates, and there might be ways of saving time with document handling (I know here in Melb, ANZ allow you to pick up documents at their document processing centre and hand them direct to their settlement agent which saves time).
In the end, it might be worth it if it saves a few thousand dollars of LMI, and the heartache of the cross collaterised loan.
Cheers
Tom
