Hi Linar

I think one of the biggest issues is being unable to prove your income and wanting to live of equity.

Lodoc loans to 80% with an unlimited amount of cash out have probably been and gone for the time being however full doc loans are still very much available to 90%.

I think it will still be a year or two before the mortgage insurers go back to allowing unlimited amounts of "cash out".

Ben

NAB Commercial loan goes to 70% LVR on residential property and the interest rate is 6.74% variable.
The set up costs including the Bear Trust and new Pty Ltd Company come to around $6000 with the right Solicitor.

I have done 7 of these deals to date and admitedly they are not straight forward I would certainly recommend it to a client looking to gear in to Super.

Hi Anthony

This question gets asked fairly regularly so do a search on the topic and you will see what has been writeen previously.

In a nutshell a lender takes your net taxable income and adds to this an percentage of your assumed rents (both current and future).

From this Gross figure they deduct an amount equating to a living allowance (varies depending on the size of your family)  as well as your existing mortgage repayments, personal loan commitments and a percentage of your credit card balance (Loan repayments are usually worked on a P & I figure 1 – 1.5% higher than the current variable rate to allow for interest rate fluctuations).

This gives a net monthly figure (hopefully a positive one) and the lender divides this figure by the monthly P & I factor for $1000 worked again on the affordability rate.

This gives the amount you are able to borrow.

What great opening post from a topic which was last raised nearly 6 months ago.

It is always interesting to look at a Companies website and see the bits that are currently "under construction" or "not currently work". On the WAG website interesting to see the Question under the FAQ about "How do you make your money?" is currently blank.

Also interesting to see that since Angela just stumpled across the post about WAG she has never managed to come back and provide the forum members with some further insight into property investing.

Maybe another 1 post wonder.

Thats one reason why C & N are getting less and less popular and other quality Accountants from the forum here are atracting more business.

Wow must admit if i adopted Bens logic i would have 45 separate Trusts.

Thankfully my Accountant of 12 years seems think 5 DFT's is the way to go and sufficient.

Away from the validity of the scheme I would be more concerned that as Terry mentioned that your mortgage broker has given you advice on everything from an Offset Account to Tax minimisation which unless he is Licensed to do he cannot provide any advice in regards to such products.

James

Probably covered a lot of them in the above post. 

You would want to think about restructuring the loans from the start to keep them nice and clean and if so i would definately use an offset account. This can be linked to the personal debt if you have any but if not your IP loan.

Not many institutions will offer a fixed rate on the LOC but nothing to stop you switching the loan to fixed once you have drawn it down in full. Many lenders are also wanting to control the direction of the funds with Lines of Credit these days so flexibility is the key.

Hi Tom

They are correct it is not a simple straight forward calculation and each lenders terms and conditions will differ.

Normally it would be based on the economic cost of the Bank having to relend the same funds in todays climate and the shortfall.

Assuming that the variable rate comes down to 5.45% then this would be a 3% saving to your current loan. On an amount of $185,000 this would save you $5550 per annum so at circa $18-19,000 you wont save anything over a 3 year period. In additional if rates where to fall further then the cost to break the loan will also increase.

I would suggest on the surface you stay put and use the equity in the property to invest elsewhere in a positve geared property or similar.

Following on from what Scott mentioned you could always look to sell your current PPOR into a Trust structure with you as the Unit holders. Look to borrow 100% of the current market valuation and the entire amount of the new loan to the Trust will be deductible.

Admitedly you will incur Stamp Duty on the Transfer but the depending on your individual Tax rates the exercise could still be well worth it. Especially if you intend to retain the current PPOR long term as an IP to build your portfolio.