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  • Profile photo of Richard TaylorRichard Taylor
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    June 25, 2009 - 1:29 pm

    IZ – Yes thats what i said but depending on the numbers can be very worth it.

    Personally I would not have touched a PIT as i am not aware of too many lenders who will lend against the structure these days.

    Richard Taylor | Australia's leading private lender

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    June 25, 2009 - 12:48 pm

    Agree with Terry totally but to add one more consideration in the absence of being able to utilise a 100% offset account on your fixed rate loan i would make sure you attach one to the IO investment loan.

    You can always close it down once the PPOR mortgage becomes variable and open a new one linked to the non deductible debt.

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    June 25, 2009 - 10:11 am

    Precisely and try and keep the loans separate where possible.

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    June 25, 2009 - 8:46 am

    Terry's answer beat me to it.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 25, 2009 - 2:12 am

    You can but the interest wont be Tax deductible and you will need more than 5% deposit.

    Richard Taylor | Australia's leading private lender

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    June 24, 2009 - 4:10 pm

    Max lvr on an IP will be 95% (Depending on where it is located will determine whether the LMI can be capialised or not)

    So you will need either 5% plus costs or 5% plus costs + LMI.

    Only other option (which i cringe as i type this) is to consider cross collateralising the 2 loans and going for a 100% loan but will boil down to the valuation on your current PPOR.

    Get your mortgage brokers to run the numbers for you to see how tight it will be.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 4:06 pm

    mmhh sounds to me like we have ourselves a problem already.

    As it stands only the interest on the amount of $150K is Tax deductible as technically the redrawn amount is not.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 8:53 am

    Hi Gems

    Yes there maybe Stamp duty payable on the Transfer but if the figures work out then certainly worth considering.

    Better still maybe to sell the property to a Unit Trust and borrow 100% of the valuation / purchase price.
    This way the the interest on the entire loan will be deductible and can be used as deposit on your new PPOR.

    If you had used a 100% offset account from day 1 then this wouldnt have been a problem.

    Richard Taylor | Australia's leading private lender

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    June 24, 2009 - 8:09 am

    Firstly I will assume your current home will be your PPOR for a while and not a future rental property.

    On this basis then i would not be using any of your cash savings to fund a deposit as this is simply not a good use of your own capital. Remember funds taken out for investment purposes are tax deductible whilst interest repayments on your own loan are not.

    You would be better off to pay down some of the capital on your PPOR mortgage and then take out a separate investment Line of credit and use this facility to draw down to cover the deposit and acqusition costs.

    Keep the loans separate and not cross collateralised. A good investment orientated mortgage broker should be able to assist you with this strategy.

     

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 8:04 am

    Eric

    Not entirely of the actual question but anyway here goes.

    If you mean do you need a deposit to purchase a property then Yes you do and minimum 5% of the purchase price + costs.
    Most lenders require this to be by way of genuine savings although couple of exceptions.
    The old days of 100% loans have been and gone.

    LMI is calculated on a sliding scale dependant on the loan amount, lvr and in some cases whether the loan is a P & I loan or IO.

    Think Qu 3) has already been answered.

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    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 2:38 am

    Hi jrm

    Will vary from lender to lender but from what you have provided i think there are a couple of options available.

    Ignoring your FHOG you are looking at an circa 83% lvr so many lenders will look at this as some form of comfort.

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    June 24, 2009 - 2:35 am

    Yes rumblings in every State.

    I remember in June 2000 when we were told GST was going to replace all State duties and taxes but someone forgot to tell the Qld Govt and they still charge it.

    Mind you thank god they do or the State will have gone well and trully bust with a capital B.

    Richard Taylor | Australia's leading private lender

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    June 24, 2009 - 1:47 am

    No just Stamp Duty.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 1:47 am

    Yes PE they have been in Oz for a while but have you ever tried to get a loan through them.

    Makes Bank West look like a breeze.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 1:39 am

    Yes i agree opprtunity everywhere BG.

    I purchased my first house in the US in 1989 over looking the beach in San Juan CA as my Auntie lived next door (and still does) and that has gone from $100K to $1MK in 20 years.

    Tx and SA have great opportunities at the moment but you wont finance the smaller deals with US lenders at the mo being a FN.

    The big FN lenders in the past such as WAMU, World, Indy Mac and Alliance Bancorp have all gone by the wayside.

    At the moment only State is Florida which readily accepts FN borrowers.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 24, 2009 - 1:34 am

    As long as the Title is in your name then you would be able to borrow against the land.

    i can only assume they require the Guarantee because of serviceability although in saying that a normal Guarantee unless it was froma  Spouse would not increase borrowing power.

    Richard Taylor | Australia's leading private lender

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    June 24, 2009 - 1:32 am

    Stamp Duty for 1 which maybe concessional depending on the State and the purchase price.

    Also Transfer would need to be at market valuation.

    Richard Taylor | Australia's leading private lender

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    June 23, 2009 - 1:31 pm

    Nel

    Convert the property to an interest only loan and link a 100% offset account to it.

    Then pay all of your income into the offset account.

    This will give you on call cash funds to be used as deposit on a future property as well as the interest savings.

    More importantly Flexibility.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 23, 2009 - 8:40 am

    Whilst i appreciate X collateralising may work for some people for most it is more trouble than it is worth for most investors.

    I guess like anything it is never a problem until it is a problem and then it is a real issue going forward.

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
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    June 23, 2009 - 6:05 am

    I am assuming the question relates to beneficiaries of the Trust.

    Answer is that the Trustees will nominate the beneficiares.

    Richard Taylor | Australia's leading private lender

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