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Hate to say this a US website and there are considerable differences between the 2 countries when it comes to financing.
Even terminology is different so would suggest you give the Professor a wide berth or you will be even more confused.
Richard Taylor | Australia's leading private lender
As Terry has mentioned a Business Plan wont even get you past first base.
Most loans are credit scored and if you fail the credit score then everything else is meaningless.
It is more about knowing the in and out works of the lender and their requirements when it comes to a combination of Credit Score / UMI ands DSR.
Richard Taylor | Australia's leading private lender
Also depending on the State in which you are in you might want to think of buying the first place as your primary residence claiming both the First Home Owners Grant and the Concessional Stamp Duty.
Once you have satisfied the elligibility conditions you could move out.
Structure the loan as interest only from day 1 and you should be fine.
Richard Taylor | Australia's leading private lender
llonka
If you have equity in the home then you could always look at a shared equity loan through a major bank.
Richard Taylor | Australia's leading private lender
Hi Jess
I can do a WA one for you if you would like.
Richard Taylor | Australia's leading private lender
I think you might find this varies from State to State so i would probably check with the Residential Tenancy Authority in your State.
In Qld the Vendor could certainly issue a Notice to Leave as the property is under Contract (assuming of course the tenancy is under a periodic lease agreement)
Richard Taylor | Australia's leading private lender
No shouldnt be an issues at all.
This is a structure we normally recommend to our clients so that they release the reliance on the PPOR as quickly as possible and shoft the debt burden to the individual IP's as soon as equity and increased valuation allows.
Richard Taylor | Australia's leading private lender
Very easy to avoid cross collateralising the 2 securities and that is to use a separate lender for the new IP loan.
As terry has mentioned set up the LOC on your existing PPOR to fund the deposit and acqusition costs and then take the majority of the loan on the new Ip.
Also if you are focusing on positive cash flow why not consider buying the new IP in Trust using a Discretionary Family Trust.
Richard Taylor | Australia's leading private lender
Sorry Jac M this is totally illegal the super fund is a business and would have to charge rent to reside in the property.
A SMSF cannot rent out a residential property to any related party under the SISA.
Penalties for breach of the Act are severe.
Richard Taylor | Australia's leading private lender
llonka
How are you going to do this ?
If you sell a part share then whoever you sell the property to will need to join on any loan / mortgage agreement that you currently have. As an investor with cash that doesnt sound like a great proposition to me.Richard Taylor | Australia's leading private lender
Definately negotiate the price first because otherwise you may well end spending money on a B & P and find that you offer and the vendor accepted price are miles apart.
Also whilst you are waiting for your report to come back to you you may well end up find that the Vendor has accepted another offer.
Richard Taylor | Australia's leading private lender
Also the number of lenders offering construction finance for a SMSF deal are few and far between.
You wont get a SMSF lend on land alone.
Richard Taylor | Australia's leading private lender
Rock i think is unlimited and they were offering 1% of the SVR until recently.
Richard Taylor | Australia's leading private lender
John just to qualify the point you made in that case the parents are not guarantors but now borrowers.
Also neither of the mortgage insurers will accept a 80% lodoc loan where the 20% deposit has been borrowed or gifted.
Richard Taylor | Australia's leading private lender
Just to clarify if you purchase an investment property and do not reside in the property you are STILL entitled to receive the First Home Owners Grant assuming all other qualifying criteria has been met.
Buying or having owned an IP does not disqualify your FHOG elligibility.
Also you would need to satisfy the terms of the FHOG so normally continual occupation of the property for a 6 month period within the first12 months.
Only other issue would be the concessional Stamp Duty in your State which may require 12 months occupation of the property.
Check the OSR website in your State.Richard Taylor | Australia's leading private lender
Jazz
Firstly welcome to the forum and I hope you enjoy your time with us.
Jac has made a couple of good points however just in case the following point is misunderstood thought i would put my spin on it.
Move into the big dwelling after a few years when the tenants have gotten the mortgage to a manageable level for you.
This comment implies that the loan should be reducing and therefore would indicate a Principal & interest loan.
This is the last thing i would look to do and would strongly suggest you took out an interest only loan with 100% fully trasactional offset account linked to it.Then if and when you decide to upgrade to a bigger home a few years time the interest on the entire original debt will become Tax deductible and the savings in the offset account can be used as deposit on the new PPOR.
Careful planning now will mean moving forward in the future will be easier.
Your Mortgage Broker should be able to assist you in this respect.
Richard Taylor | Australia's leading private lender
Hi Carl
Dont worry being a Financial planner many clients tar us all with the same brush until they get to know what you do lol.
You want to maximise your interest deductions on deductible debt and therefore do not want to be paying off principal on a investment property especially if you still have a non deductible loan secured on your PPOR.
Secondly what starts off as your PPOR may change (as per your potential position) in time so again you dont want to pay down the loan as interest on a redraw is not deductible.
Assume you pay down your current home loan by $50,000 and then in 3 years time decide to move and for your deposit redraw the $50K of extra capital payments. The interest on the $50K is not deductible however had you placed the $50K into the right type of offset account you could have drawn out the $50K and the interest on the entire loan to which the offset account was linked to would be still be deductible.
I think subject to cost restructuring both loans may still be viable.
Richard Taylor | Australia's leading private lender
Duncan youare bang on but remember there are offset accounts and offset accounts.
Richard Taylor | Australia's leading private lender
Hi Carl
Firstly some of us financial advisers dont charge an arm and a leg but i agree in most cases the industry is littered with either those FA's seeking out the highest commission paying products to recommend or charging unrealistic fees for limited advice.
Now onto what you originally asked in your post:
Couple of things spring to mind which are a wee bit of concern.
1) I assume the current IP loan is a fixed rate product at 8.09% and also appears to be a P & I loan which is a definate NO.
2) Whilst you only settled on the new PPOR loan on Friday is this loan also P & I ? If so given what you are trying to achieve in a few years time again another NO.
At 6.39% the rate is rather high and whilst i dont think Sonya has factored in a couple of recent rate rises into her quoted rate you could do a lot better.
You mention the offset account so assuming the loan is with the right lender it is a fully transactional 100% offset account.
Structure and flexibility is the key to every home loan and without this your investing path wont be going too far.
Richard Taylor | Australia's leading private lender
Yes with the majors it is normal however with a lot of lenders you can have multiple offset accounts.
Richard Taylor | Australia's leading private lender
