Forum Replies Created
Hi Jon
Ok buying with friends or other parties can have issues especially when it comes to finance going forward.
Many lenders will only allocate 1/3 or 1/2 of the rental income that is received on the existing investment properties to the income side of your ledger whilst taking 100% of the current liability. This of course significantly reduces the amount you can borrow.
To avoid this use a Mortgage Broker that is experienced in investment lending and structures to ensure you can keep on borrowing.
Now should you wish to utilise the equity in the current properties remember all parties to the Title will need to sign the new loan agreement and this will increase their liability.
In similar cases for existing clients we have suggested the set up of 2 sub loans on the property for the same amount with each split being the same amount. I.e $40,000 each.
Whilst both parties are jointly and severally liable for the total loan each party can agree to do with what they like with their own split.
If this is not an option and you have no other equity to draw upon in your own name I would:
1) Use minimal cash to purchase the property and borrow the balance.
2) Use a Term Deposit as additional security and borrow 100% of the purchase price.
Again i can't stress how important getting the finance structure going forward is.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
The other issue you might come across is if you go to another lender who uses Valex there is no guarantee they wont use the same valuer and you will be back to square 1.
Just make sure you go to a lender that orders a valuation upfront before doing a credit search otherwise you might have unnecessary credit entry that will affect your credit score going forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi delbs
Can you drop me an email directly or Pm me your email address and I would be happy to let you have a copy of my API interview.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Easy Joe
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Joe
Certainly it usually involves short term financing to bridge the amount required to purchase the new property whilst you are selling the old property.
Assume you own a property with an estimated valuation of say $400,000 and owe the Bank $100,000
You want to purchase a new property for $500,000.
The Bank would lend you $500,000 giving you a total loan of say 600,000 based on total security valuations of $900,000.
Interest would be charged on the $700,000 which might be capitalised to the loan until the initial property was sold.
On settlement of the sale of the first property the lender would want the loan reduced within acceptable lvr's
There are a couple of variations on the theme but in essence the end result is the same.
Hope this helps.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi merf
The CG has experienced a few problems over the last few years with softening valuations however there are some real bargains to be had.
I personally purchased one of my best properties on the CG last year and due to demand from investor clients have started to source property for rent or refurb.
Personally i would steer clear of Coomera and focus on the Northern end of the GC.
Don't think you will find much <250K in Scarborough.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
As Jamie mentioned getting your finance in order at an Auction is important but you also have to remember no lender will give you an iron clad formal approval on an Auction property so there is always an element of risk.
Talk to your mortgage broker who will probably have a few ideas to mitigate lot of the risk.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Joe
The issue comes in wanting to construct multiple townhouses.
Doing a single OB deal isnt a problem with the right lender.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Kaz
Sorry i have to disagree.
I do a fair number of SMSF loans and you would be surprised as to the difference in costs / interest rates between lenders.
The big 4 (Anz does not write residential SMSF loans) are out of touch when it comes to their charges and costs hoowever away from these lenders the competition is good.
Remember many lenders charge on the basis that they consider the loan to be a Commercial transaction.
Get your Mortgage Broker to shop around and i think you will be see the difference.
As for the comments on lawyers fees i never have a problem in paying a sensibleprice for good advice.
I know what we charge a client for doing a development finance deal or putting an investor into a Vendor Finance deal and i bet it is lot more than Terry charges for legal advice.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Urilla
Disgree there are many companies that offer such a service depending on where you are look to develop.
Course financing such a proposition isn't easy unless you are fairly well cashed up as the asset value diminishes to land value once you knock down the existing property. Then if you are trying to do it by way of residential financing you have the potential issue of multiple properties on a single title.
All of which can be overcome depending on a number of factors.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi booge
When you ran the numbers to see whether you can afford to keep both properties did you factor all of the deductions you could claim on your current PPOR which of course will be the new IP.
Deductions would include both cash and no cash deductions and you maybe pleasantly suprised as to how much the real bottom line is.
Even if you decide to sell the PPOR you might be able to structure the loan in such a manner that you can buy the new PPOR prior to selling.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Cha
Before you rush off and list the property for sale i believe there are other factors to consider.
The ATO apply the "Purpose Test" to the use of the funds although I am assuming you own the property in your sole name and not jointly. If so a spousal transfer could be an option.
There are a couple of actions i would probably take now to ensure that you don't contaminate the interest further whislt you are deciding on what to do.
Get your mortgage broker to run the numbers on both scenarious and see what difference it makes compared to the cost of selling the current asset.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Ailime
When you say can you access the equity for a deposit are you referring to a new IP or PPOR?
Whichever way Yes you can access the equity however if the funds are for a new PPOR it wont be Tax deductible.
Structure it correctly and keep both loans separate and you will be able to access the equity for a number of property purchases.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You would sell the property at an initial nominated price and retain title to the property whilst the buyer pays you with a series of instalment payments.
You would charge interest on the outstanding balance at a higher rate than you are being charged by your current lender and retain the cash flow difference.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Have you looked at selling it under Vendor Finance terms.
Certainly would increase the cash flow.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Good luck in trying to finance such an arrangement.
Lenders wont like an OB deal for a investment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
No certainly have no problems with at all.
Just often find however much advice you offer someone often they still go out and do what they want so prefer to keep the advice general on a forum as you don't know specific circumstances.
When you mentioned your loan will be with Homeside it drew me to the conclusion that you had to have a Broker on board as they don't take direct business from the general public.
No point in posting a response if he or she advises you differently.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yes as been said do a fair bit of Spousal Transfer work and not as easy it sounds.
Firstly need to do the Transfer and the new loan at the same time and be suprised how many lenders can't wrap their heads around it.
Also sorry to say Stamp Duty is payable but will only be on the balance of the Transfer value and not on the full new consideration.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tracy
As Derek has mentioned hate to say No you aren't able claim interest on the $110K.
Easy to be wise in hindsight but often best to look at an interest only loan with 100% offset account.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yes lvr under 75% and over 200K but still a very attractive product for the right client.
I love Advantedge as they are so transparent in their credit policy, No application, valuation fees, no ongoing fees or charges and service with the right BDM is second to none.
Admittedly not for everyone but if you are a vanilla investment product you really can't go far wrong with the backing of NAB behind them.
Course not for everyone and lots of things they wont do but it is what the market needs someone who stands up and does deals without all of the nonsense that goes with it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
