Forum Replies Created
Ediot
Yes it would certainly limit your Tax deductions but it will also limit your loss.
If the interest is greater than than the rent being received you are only negatively gearing the asset at your highest marginal rate.
Someone still has to cover the other shortfall.
If you can reduce this why wouldnt you.
This is of course subject to not having any non deductible debt.
Richard Taylor | Australia's leading private lender
Harry
Couple of answers:
1) When do i start paying the principal and do i have to pay it all at once.
No you dont have to pay at all subject to the provisions of the loan offer.
Most lenders have a maximum interest only period before they look to roll the loan over to P & I whilst others
subject to the LVR allow an Evergreen facility which means it will be IO for the term of the loan.2) Is it beneficial to make extra repayments in such a situation
This will depend on whether you have any non deductible debt but assuming NO then subject to having an
offset account (rather than the loan account) i would pay all of my income into this account to save $$$.3) Is it possible to have a IO loan and hold on to the property for long term( approx 10-15 years)
Yes subject to 1 above.4) Any other negatives in such a situation
Not as long as you are disciplined and dont spend all of the funds in the offset account on non appreciating
assets.Richard Taylor | Australia's leading private lender
Would you like to expand more on what you mean by Bad Debt.
Just there is a big difference between Bad Debt and A Bad Debt.
Richard Taylor | Australia's leading private lender
Firstly thanks very much Andrew for the wrap its a pleasure as you now.
Terry is correct whilst some lenders will insist there is a repayment made on the LOC others will allow the interest to capitalise.
As long as it is not perceived that the loan was set up purely as part of a Tax avoidance scheme i cannot see an issue in this as part of a debt recyclying plan.
Would need a wee bit of careful planning to establish it correctly in the first place.
Richard Taylor | Australia's leading private lender
What do you need it for ?
Richard Taylor | Australia's leading private lender
Hi Darren
Probably a couple of lenders i can think of which would meet you requirements but wouldn't list them on a public forum.
Richard Taylor | Australia's leading private lender
Hi Darren
Flexibility is the key and therefore why would you want to pay off the principal when you might 1 day rent the property out.
If you redraw the principal payments you have made back during the time when you are living in the property the interest becomes non tax deductible so to me i can see NO reason why you would do so.
St George Spring special looks good on paper but there are a lot of negatives. Most borrowers merely look at the bottom line interest rate and clearty have no understanding on the other fees and charges. The other thing is the Banks underwriting terms at the moment are clearly not the best.
There is no set lender as each client is different and would need a little more hard data to make any recommendation.
Richard Taylor | Australia's leading private lender
Irrespective of whether it was an investment property or not if he is your partner /spouse as per the OSR definition then you will not qualify for the FHOG.
Richard Taylor | Australia's leading private lender
Reggie i have posted a response under the finance forum.
Richard Taylor | Australia's leading private lender
Hi Vinod
Yes if the mortgage insurance is charged as a result of an application for an investment loan then it is considered as a loan cost and can be claimed over 5 years or the term of the loan whichever is shorter.
I would not be keeping all 3 loans with the same lender if LMI is required as the premiums rise as the loan amount increase.
The threshold for LMI is < 300K / 300k > to 500K / and over $500K.If you have a couple of properties I am guessing you are in the higher category.
Different lenders and different mortgage insurers charge different premiums so get your broker to shop around.
Might be an idea to take a 95% LVR on one loan and say 90% on the other all depends on the numbers.
Richard Taylor | Australia's leading private lender
Thanks for your opening contribution.
Richard Taylor | Australia's leading private lender
I have financed a couple of deals from clients who have purchased through them over the last week or so and both properties appear to have been purchased at less than market valuation.
Certain time constraints when it came to finance approval but all in all as long as you have your structure in place should be fine.
Richard Taylor | Australia's leading private lender
Hi Regina
Regretfully i think you will find the average Bank will run a mile as soon as you mention to them that you are wishing to purchase a property to onsell by way of an instalment contract.
Do either of you hold an ABN as a lodoc 60 loan might be a consideration. Other than this i think you will struggle.
On a separate note have you carefully considered the implications of buying the property and finding that the buyer does not make payments to you and refuses to leave the property (I am assuming that you the buyer is not a family member or close friend) and you are unable to service the new debt.
Richard Taylor | Australia's leading private lender
50% Lvr in the current climate is a good loan to valuation for such as specialised security.
Richard Taylor | Australia's leading private lender
Yes great effort and shows what can be done if you buckle down and save.
As crj mentioned i think you are a fair way away off getting approval for a loan as neither of the mortgage insurers will accept an application where there is a default so that will limit your lvr.
Head down and save again and I am sure you will get there.
Richard Taylor | Australia's leading private lender
Hi Darren
Personally i would look at an interest only loan with 100% offset account and place your salary and any other income into the offset account to reduce the interest cost whilst the property is your principal place.
If you elect to rent the property out down the track and buy again you can always remove the offset funds and use these for your new purchase.
Flexibility is the key when planning ahead.
Richard Taylor | Australia's leading private lender
Hi Wannabe
Welcome to the forum and I hope you enjoy your time with us.
Difficult to give you any information without hard data.
Mortgage insurers dont like lease back display homes but depending on the rest of the deal maybe ok.
Richard Taylor | Australia's leading private lender
Thanks Matt appreciate the comment.
Richard Taylor | Australia's leading private lender
Unfortunately one solution does not meet all however normally
Buy & Hold – Interest only
Wraps – Principal & Interest
Flips – Interest only.Richard Taylor | Australia's leading private lender
Hi Matt
Good to hear about the sale process.
My apologies i may have misread your quote i was under the impression you had thought that the Trustees of the DFT could claim the loss each year.
Your revised understanding is correct.
Richard Taylor | Australia's leading private lender
