Forum Replies Created
Hi Adrian
Typical broker answer but Yes / No.
Sorry about that but couldn't resist it. It all depends on what line of work you are in.
i have just completed a couple of deals for a forum client in IT and he switched a month or so ago now contracedt to 1 employer thru a Recruitment Agency but income has increased considerably so in IT is expected.
If however he was Contracting to a couple of employers and considered self employed the deal would have been a lot harder.
It is also going to depend on the lvr of each new IP as over 80% another hurdle to cross and even with DUA on the LMI some lenders would have an issue.
As i say more info probably needed at this stage to give you structured answer.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Sam
Difficult to comment without all of the other financial information but assuming you have no cash funds i think you will be limited to what equity you can access.
Most lenders will limit your equity release to 90% of their valuation so depending on whether the renovation has added much in the way of increased value will determine what you can and cannot get out of the deal.
Realistically for an IP you are going to need 10% of the purchase price plus your acqusition costs so on a $350K purchase price probably need around $50,000 in accessible funds.
Who is the current lender ?
This will determine who they use for valuation and the likelyhood of squeezing out some extra funds.
If you do have cash i would be looking to pay down the current PPOR loan and taking out a new sub loan to 90% of the lenders valuation. You want to maximise your deductible debt.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Derek
Things must have changed in the West because in the rest of the Country some of the information we see clients provided with by their Bank or Banker still leave a lot to be desired.
Classic case this morning on a SMSF deal here in Qld where the Bank told the client to sign the purchase contract with 3 names as he yet formed the Security Trustee Company:
1) Personal Names
2) SMSF Name
3) And or Nominee.
Unfortunately non of these are correct and insertion of any of these names would incurred double Stamp Duty in Qld which would cost the client around $18,000. Thankfully we are doing the doing the deal thru another lender although the initial Bank cant see what all the fuss is about.
Simple story don't take Tax or Legal advice from anyone who is not licensed to give it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agree with Jamie don't think we have ever had a Broker from the West who has ever hung around for more than a day or so.
Most of us deal with clients all over the place and other than the time difference makes no difference where the client comes from.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yes you can but can still only claim the interest on the current mortgage of $200,000.
Wont make any difference on where you secure the new loan it the purpose that dictates the deductibility.
If the property is jointly owned a spousal transfer is worth considering depending on where the property is located.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
JP888
Ok so you paid a cash deposit not ideal.
More importantly can you tell us which institution financed a 95% lvr on a NRAS property ?
Be keen to know. Maximum i have ever got a client is 90%.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I did respond earlier but i don't know what happened to the post.
Definately look at interest only with 100% offset rather than principal & interest loan.
My question was is did you put down a deposit for the new investment property or create a sub-loan on your PPOR ?
Certainly sounds like the loan need a little bit of restructuring.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I agree without knowing the actual numbers it is difficult to comment but i can think of a couple of ways of reducing your out goings and increasing your deductions.
Seems very unusual to me to for a property like that to be costing you so much.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi JP888
Firstly welcome to the forum and I hope you enjoy your time with us.
Sounds to me like a perfect time to be looking to review your current lending set up and restructuring your loans.
Of course without knowing actual numbers it is difficult to provide you with too much accurate information but in the main
Good to hear that the 2 loans are separate and with different lenders. Did you end putting a deposit down on the IP or did you structure the deposit with a subloan.
I would also be converting your current PPOR loan to one of interest only and creating one or more sub accounts to allow for future deposits for both investing and PPOR acqusition.
As i say if the NRAS property is almost complete you probably need to move fairly quickly as sounds like you need a little loan restructuring.
Any questions ask away.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I agree forum is a great source of information sharing.
Do not pay out anything more for so called mentoring as many of us do it for the love of it and the fact that it gives us great pleasure in seeing other investors get ahead.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Matts
I rest my case. Why would you ever pay down your PPOR where there is any possibility that the property could 1 day be an IP.
Interest only with 100% offset would have been the way to go.
Gives you both choice and flexibility as well as preserving the interest deductibility.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Morgan the type of loan structure will depend on a 101 factors but in the main interest only with a 100% offset account.
Course when you say you have a deposit saved up how much are we talking about?
Remember you don't only need the deposit but the acqusition costs and more than likely the mortgage insurance premium.
Of course very hard to provide specific advice without actual numbers.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Matts
Sorry have to say a Mortgage Broker who suggests you pay down your current PPOR before investing (especially if you potentially might rent out your PPOR) is not a great mortgage broker and clearly either does not have sufficient investment experience.
Buying IP's is a journey and like any journey you need to plan for it. This includes a balance between the financial structure and being comfortable with the loan commitment and the affects if any it has on your way of life and the family balance.
No point in owning a couple of properties but cannot take the kids out at weekends because they are costing you a packet.
There will always be opportunities in this world but how and when you take them is upto you.
To say to someone pay down your PPOR first before investing does not sound like the words of someone who has taken up many of those opportunities.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
And there was me thinking there was a 3 line signature rule…….
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jac
You are so right it can be an absolute minefield and lenders interpretation is a whole new ball game.
Just processing my 4th SMSF deal for August across 3 different lenders and the requirements of each is totally different.
Also some of the advice i hear the clients receive also makes you scratch your head and make you think will the ATO come thru SMSF in a year or two and put a stop to the lot.A
Anyway done properly it is good business for a Trustee to see their asset growing slowly over time with someone else's money.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jac
You are so right it can be an absolute minefield and lenders interpretation is a whole new ball game.
Just processing my 4th SMSF deal for August across 3 different lenders and the requirements of each is totally different.
Also some of the advice i hear the clients receive also makes you scratch your head and make you think will the ATO come thru SMSF in a year or two and put a stop to the lot.A
Anyway done properly it is good business for a Trustee to see their asset growing slowly over time with someone else's money.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You could always consider a Spousal Transfer in order to maximise your deductions and provide you with additional net income to pay down your non deductible PPOR home loan.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Given the favourable purchase price i believe you could find a lender lend against the valuation rather than the purchase price.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Steve
Unfortunately there is no link to such information as each lender works off its own serviceability formula.
As i mentioned lenders have adopted the Household Expenditure Model for assessing their Living Allowance expenditure and this means a reduction in how much you can borrow.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Must admit i am not an expert on what NZ lenders are offering however in saying that i think in the current climate you have 2 chances and one of them is buckleys.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
