Forum Replies Created
Please totally ignore the above post as I appear to have posted it in response to another question.
Richard Taylor | Australia's leading private lender
Common guys before we completely knock off outfits like this I am sure there is value in paying an upfront membership fee.
Maybe when my information pack arrives it will tell me in it what the benefits are and I can enlighten you all.
Richard Taylor | Australia's leading private lender
Hi Air
Firstly welcome to the forum and i hope you enjoy your time with us.
May i ask you why you wish to pay the home loan off as quickly as possible.
Certainly you want to structure your loan in such a manner that you reduce the non deductible interest but remember once you pay off the principal you loose flexibility and the option down the track to rent the property and claim the full interest as a tax deduction.By converting the loan to an Interest only loan you will reduce your monthly committments and free up more taxable income to enable you to invest.
Remember depending on the suburb you look to buy in you can still obtain a 100% loan and even more subject to your current equity position.
Personally as long as your disposible income is sufficient I wouldnt be putting off increasing your property wealth merely because you have a current home loan.
Get your mortgage broker to undergo a serviceability check for you and suggest ways of restructuring your home loan to maximise your interest savings.
Richard Taylor | Australia's leading private lender
Hi Sandy
Welcome to the forum and i hope you enjoy your time with us.
Will you be investing with your daughter in a Tenants in Common capacity or merely as an investor.
Who will be providing the deposit for such a new venture.
Depending on the answers to the above try the following link this could be useful place to start.
http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=60
Richard Taylor | Australia's leading private lender
Totally agree with the last couple of comments.
We see it all the time Accountants giving Financial Advice when they are not licensed to do so.
Richard Taylor | Australia's leading private lender
But doesn't the financer use the deposit to offset any potential depriciation in the mortgage loan? Isn't that why banks are chasing deposits now – because the value of property is decreasing and the deposit acts as a kind of surety for the bank/lendor?
Not at all. 100% finance is still alive and well.
Richard Taylor | Australia's leading private lender
There is no CGT on the sale of the PPOR to a Unit Trust.
Richard Taylor | Australia's leading private lender
No not at all.
It is perfectly legal for a Vendor to provide part of the deposit as long as it is clearly disclosed to the financier.
The purchasers Bank will lend against the purchase price or valuation whichever is the lower so if they were concerned that the purchase price was not necessarily genuine they would down value the property.
Richard Taylor | Australia's leading private lender
No not at all.
It is perfectly legal for a Vendor to provide part of the deposit as long as it is clearly disclosed to the financier.
The purchasers Bank will lend against the purchase price or valuation whichever is the lower so if they were concerned that the purchase price was not necessarily genuine they would down value the property.
Richard Taylor | Australia's leading private lender
Steve
You know there is no limit when i take your emails…. at time is good for me.
Hope all is well mate.
Richard Taylor | Australia's leading private lender
Anthony
Precisely, at the moment the interest deduction on your current loan assuming the property is jointly owned will be shared
50 / 50 giving little value to your fiance.Richard Taylor | Australia's leading private lender
Legal in every State.
Get your Solicitor merely to draw up the Contract that you are prepared to accept an amount of purchase price less 5% on settlement with the 5% balance to be repaid over X Number of Years with payments of principal & interest and charged at Y interest rate per annum.
Hardest part will be getting the purchasers financier to buy it but if they do then you are away.
Richard Taylor | Australia's leading private lender
Sorry for the delay in coming back to you on this one.
Whilst i agree with Terry you would use your line of credit if the property is to be substanially renovated with a few lenders allowing for revaluations to be done immediately you have settled (if there is a reason why the property has increased) I cannot see any reason why you would not secure the majority of the loan against the security itself.
Assume you purchased the property for $200,000 then i would be looking to take out a standalone IO loan against the new IP for $160K and maybe use the LOC for the deposit and acquisition costs. You could link an Offset account to the IO loan and at least save interest especially given that you have no non deductible debt.
Secondly I would split the LOC so that you can easily identify the interest which can be allocated to this property alone and then if you repeat the exercise down the track have a second loan split for the next IP.
Remember if you deposit funds into the LOC whether it be wages, rent or other forms of income the interest on the redrawn amount is only deductible if the purpose is for investment.
Call me old fashioned but i like my offset accounts. Traditionally LOC are charged at a slightly higher interest rate and every dollar you can save helps the overall cash flow position of the deal.
Richard Taylor | Australia's leading private lender
Please be careful… could lead to Debt creation companies instead of wealth. – Totally Agreed
Richard Taylor | Australia's leading private lender
Eddie
Hate to say a lot of money can be spent on something you just dont need.
Why not post your questions on the forum and we can all answer them for you. This will give you a start.
Richard Taylor | Australia's leading private lender
Stay in your current PPoR, top your loan up to purchase a new IP almost outright, postively gear it and use the income to pay your PPoR off quicker. This will of course INCREASE your taxable income, but if you structure it in a trust you can allocate that income so that it goes to the person on the least income – minimising the effect that can have.
The interest on the topped up amount, whilst not deductible by yourselves, is deductible in the trust so the net effect is the same.
I must admit i like Imulgi's enthusiasm but this is not quiet correct (assuming i understand the post). If you gear the property to 100% it is unlikely to be positively geared in the current climate. Furthermore you can distrubute any surplus rental income to the beneficiares if the property is purchased in a Discretionary Family Trust. Under such a structure the interest is not deductible within the Trust structure as any loss is preserved in the Trust.
If you use a HDT or Unit Trust then you loose the flexibility of the income distribution as the income needs to be allocated in accordance with the Unit holding.
On consideration is to think about selling the current PPOR into a Trust structure (probably a Unit Trust depending on the numbers involved) and pay the additional stamp duty. Borrow 100% of the current market valuation and use the net surplus funds (difference between the market value less the current loan) as deposit on your new PPOR. The entire interest for the loan on the old PPOR becomes dedcutible and the new loan is negligble depending on the actual purchase price.
If there is some variance in the marginal tax rate of the current owners this strategy becomes even more effective as with the present situation it is likely the property is held as Joint Tenants and therefore the income and expenses are shared equally.
Richard Taylor | Australia's leading private lender
Hi Chelley
We have done this repeatedely on deals and no the Vendor Finance is certainly not unsecured.
All that happens is that you would register your mortgage after the Bank priority and accept that in the event of default they would get paid out first.However if the purchaser ever tries to sell the property down the track he cannot get clear title to the property until such time as your debt is repaid. Depending on the laon amount you could do it over say a 5 year period and charge him say 8.5% principal & interest.
Whilst their is inherant risk in every transaction if the loan is secured then at least it is not as risky as it could be.
Richard Taylor | Australia's leading private lender
Tess my apologies comes of typing quicker than i was reading.
Saw the word lodoc and went for it lol.
With what you have even Mortgage Choice should be able to cope with that sort of loan enquiry.
There are a couple of lenders waiving their application fees for First Home Buyers so that all bears well and you should be able to negotiate a good deal.Why not post what they recommend once you have seen them and we can make comment.
Richard Taylor | Australia's leading private lender
HI Tess
Must admit my opinion is slightly biased being a broker myself however feel that a Bank is hardly like to tell you that you can do better down the road.
Lodoc loans are a specialised area especially in the current climate and your mortgage broker should be able to assist you in structuring the loan correctly the way in which it works best for you and not the lender.
Unfortunately I have little time for sausage machine brokers like mortgage choice who are merely interested in churning you through and the service and advice is only as good as the franchisee.
A lot of the lenders you have mentioned do not have cost effective loan products in regards to lodoc loans so at least a broker can give you a few alternatives subject to your requirements.
Would need a few figures and some further information to make a decent recommendation.
Richard Taylor | Australia's leading private lender
As Terry has mentioned a DFT is the ideal entity to use in a case like however if you need to claim the Tax losses each week then maybe not the way to go.
There is nothing to stop you buying the property in your name alone and taking out a high lvr loan against the security
i.e 95-100%.In the event of having to sell the property the first mortgagee will get his money back first irrespective of any pending litigation.
Richard Taylor | Australia's leading private lender
