Forum Replies Created
Patrick
Regretfully the days of Westpac going to 85% lvr without LMI have been and well gone.
Richard Taylor | Australia's leading private lender
Coxy
Costs sounds about right but i would get the equity loan set up now and then look to use a separate lender for the next investment property.
Keep them separate.
Richard Taylor | Australia's leading private lender
Grant
First thing you might like to do is remove that Cap Locks on future posts.
You mention you have $50K equity is that actual equity or usable equity as there is a big difference.
What you need to do initially is get your current lender to revalue the current home and advice you how much they would lend against the property by way of an equity loan (Line of credit or straight investment loan).
Once you are aware of the net amount you can work backwards to see what deposit you can put down (less acqusition costs and LMI) for the next property.
Unlikely you would get more than a 95% lend on the new property and only a few lenders around still offering such a product but a revaluation is the main starting point.
Richard Taylor | Australia's leading private lender
Hi Tom
Think we have been this route before.
There is only 2 standard lenders left i am aware of who will do lodoc construction in the current climate and the interest rates are not attractive.
Refinancing a lodoc deal is also an issue in its own rights.
Both loans would need to be done on a declared income basis.
Richard Taylor | Australia's leading private lender
Pcuser
When you say equity is that actual or useable equity.
Does that take your loan to 80% or 90% of the current value as there is a big difference.
There are quiet a few variable to be able to answer your question but that is a good starting point.
Richard Taylor | Australia's leading private lender
Or the client failed to tell you the finance you arranged on his land and construction was actually for residential development and he sells the property post construction cleans up on the sale and you loose 100% of the upfront.
Then has the nerve to ring you and tell you he has more business for him.
At which time you politely tell him you dont need his business thank you.
Richard Taylor | Australia's leading private lender
A Lodoc / Nodoc loan would only be required if you are unable to substantiate your income thru you last 2 Years Tax returns.
Due to your occupation it is not as easy as it sounds but as mentioned we have financed another client in exactly the same way recently. Only issue i could see was if you are not registered for GST (and probably not required to be being a day trader) you cannot declare a Turnover of more than $75,000 Per Annum.
Richard Taylor | Australia's leading private lender
Hi Jim
On the basis you dont need to part with any money until the settlement of your PPOR i cant see an issue in arranging the finance on such a deal.
I have a client in exactly the same boat as you who has been trading derivatives for 20 years and whilst many lenders didnt like that as an occupation his net worth is substantial and we managed to get the deal over the line.
A copy of the unconditional sale contract will help the situation.
Just on a separate not is there a reason why the Settlement date is July 1.
Hopefully it is not for Capital gains purposes as if so CGT is based on the Contract date and not Settlement date.Richard Taylor | Australia's leading private lender
TJMC
Firstly welcome to the forum and I hope you enjoy your time with us.
Normal structure we recommend to clients is along the lines as follows:
1) Look to take out either a Line of Credit or Investment loan sitting in behind the initial loan for the principal place of residence and then use these funds to draw down to cover the deposit and acqusition costs on future IP's.
2) Take out a standalone investment loan to 80% or 90% of the new purchase price on each new IP using the LOC or investment loan to funds the balance.
As the IP increases in value look to debt recycle by increasing the standalone loan secured against the IP and using the raised funds to pay down the investment loan or LOC secured against the PPOR.
Link an offset account to the initial PPOR loan and have all sources of income going directly into this to maximise the interest saving on the non decuctible debt.
You can always look at a secondary LOC to pay your investment property costs such as Rates, Land Tax etc and allow the interest on this to capitalise.
Totally agree you need to use a Broker who has purchased one or two properties and who can walk the walk as how can he / she structure such a facility and provide recommendation to clients when he cant even create property wealth for himself.
Richard Taylor | Australia's leading private lender
IP
Purchasing your wifes interest in the property would not incur Stamp Duty in NSW under from memory Section 8 of the Duties Act in NSW. Of course once the property becomes an IP this is a different story.
Also need to be careful how you structure the deal to maximise your deductions.
SImply what you are wanting to achieve is a shift in the debt from non deductible interest to deductible and this is one way of doing so.
To answer Terry's point Interest only gives you flexibility. As you have already seen what starts off as a PPOR can often end up being a IP and therefore interest only with 100% offset has its benefits.
Of course by all means if you decided this is the PPOR for you forever and a day and want the comfort of seeing debt reduction you could pay the debt down and switch to a P & I loan.
Richard Taylor | Australia's leading private lender
As Banker mentions policy varies from lender to lender.
There are lenders out there that charge to have their in-house legal depts assess the suitability of the Trust Deed and the Company Constitution and there are lender that dont.
In saying that there are lenders that charge application / valuation / on going fees and there are lenders that dont.
Horses for course.
In the main we have never had a problem.
Even Company lodoc is doable these days at normal rates.
Richard Taylor | Australia's leading private lender
Think i would give it a wide berth.
Unless you are seeking a very low lvr yourself you may that your Bank wont fund the deal if the property is only part complete.
Richard Taylor | Australia's leading private lender
What was it 4 out of 131 recommendations taken up.
Still we have a budget in the non too distance future (like next week) so may get a few uncontencious recommentations added then.
Wont be until post election time will you see any real changes.
The Mining Tax and the Super increase must have been the worst kept secrets in town and i think you will find the big 2 miners had this factored into their share price over the last couple of weeks. BHP have opened 3.63% but a lot of that will be to do with what happened overseas on Friday.
Richard Taylor | Australia's leading private lender
The new Super Tax is based on Profit and not like the old days when they were Taxed on Royalties.
Cant see any long term effect to property investing in these areas whatsover.
Richard Taylor | Australia's leading private lender
As Terry has mentioned as long as your existing PPOR is in an area where you feel you can achieve a good rental return and the area has good capital growth prospects then I wouldnt sell the property in the open market.
However in saying this if the property is owned Jointly I would certainly do the numbers on you buy your wifes share to maximise your gearing on the property and use the funds to put down as deposit on the land and ongoing construction. Keep the loans separate.
You wont be able to do so during construction with Anz but when the property has been completed have a look at setting up either a LOC or investment facility against the to use as deposit for future IP's.
Might just need a little careful handling when setting up the faciltiy as the loan Anz Branch will probably have no idea.
Richard Taylor | Australia's leading private lender
Most lenders understand a Family Trust structure however the costs for establishment and the potential rate discounts may vary from lender to lender.
Personal Trustees will give you more scope for negotiation as with a Corporate Trustee some lenders will not offer the Professional packages etc.
Certainly will NOT help you increase your borrowing capacity as the Trustee provide a Guarantee for the loan and this needs to be disclosed on any new application. Misconception from the good old days of financing.
Yes a DFT has benefits when it comes to Tax minimisation and asset protection. Of course the property needs to be positively geared to be able to minimise your Tax payable.
Richard Taylor | Australia's leading private lender
THGH
Yes sure you could certainly save 0.6% with the 0.5% increase and the 0.1% you receive for the prepayment.
Richard Taylor | Australia's leading private lender
Hi new
Easiest way to structure the loan is to look at taking a separate loan secured against your PPOR to either 80% or 90% of the current valuation and then using these funds as deposit on the land,
Separately take out a standalone loan secured against the land and on going construction.
Consider using a separate lender to avoid cross collateralising the securities.
Richard Taylor | Australia's leading private lender
The Title owner is the one deemed to be the owner of the property and is who can claim the interest deduction.
Richard Taylor | Australia's leading private lender
Nitro
1) is doable but 2) isnt and would mean the fund would have to liquidate the assets and roll the fund back to a retail fund.
Arguement being that if the Trustees are not in town how can they be performing the job of managing and assessing the Funds assets.
Richard Taylor | Australia's leading private lender
