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Sorry WA with an initial 97% LVR and with P & I repayments for less than 9 months how would this be beneficial ?
Depending on your overall situation could consider sale of first property to a trust with you and family as beneficiaries to release as much equity for PPOR purchase to make sure minimum non deductible debt.
The Stamp Duty irrespective of the State in which the property is located would not make this worth it and dont think should be treated as a course of action to be considered for Triggerman.
With regards to the other 2 questions:
1) You could use any advance payments within the loan as deposit but remember the interest on the amount redrawn is not tax deductible so would need to be a separate loan.
2) The additional premium will vary from lender to lender but in some case LMI on a P & I loan is slightly more expensive than an IO. All depends on with whom you loan is with.
Richard Taylor | Australia's leading private lender
Hi PK
You can certainly access the available equity in your IP but the interest will not be tax deductible as it fails the ATO "Purpose Test"
One consideration would be to look to sell your IP into a Trust structure borrowing the total loan amount and therefore using the sale proceeds less the existing debt as deposit for your non deductible home loan.
The transfer would trigger stamp duty and possibly CGT however in saying this doing the numbers in todays higher interest rate climate may still be worth it.
Currently we have over around half a dozen clents doing exactly this as I type.
Richard Taylor | Australia's leading private lender
Another firm of Property Spruikers doing a public service for the community.
Maybe they are all the old Investor Club Suppoer members who have seen the light.
Richard Taylor | Australia's leading private lender
Pete
Not exactly sure i understand the last point but i will try and answer it.
Her loan to you would be considered an Asset and the repayments income however the LOC would be considered a liability and hence the credit limit taken into play when calculating her expenditure.
Richard Taylor | Australia's leading private lender
Sounds like NZ is a wee bit behind the times.
We have been actively doing this in Qld for 12 years now.
Richard Taylor | Australia's leading private lender
Carolyn
Firstly welcome to the River City.
There is the SS Forum meeting in Salisbury but nothing i am aware of where someone wants to share information and not sell you something.
Richard Taylor | Australia's leading private lender
Hi Pete
Not so much for protection for each of you but more to prove to the ATO that the agreement is in place.
I use a blank Mortgage Form 1 document here in Qld but each State is different.
Just ask your Solicitor for a blank Mortgage and complete the bits yourself.
Richard Taylor | Australia's leading private lender
Hi Imulgi
Wont confuse you even further with life, TPI / Trauma / Keyman and a few other insurances.
If you purchase a freehold IP then probably all you will need is Landlord's insurance.
If the property is a Strata Title property i.e a unit in the block then the BC will insure the building however some lenders do require you take out an individial ST policy.
Cost will vary from company to company but most of the ones we use you are looking at around $250-$300 for a pretty comprehensive policy.
On the loan front most of the lenders will not offer you appropriate discounts using a Corporate Trustee but there are still a few out there so make sure you Mortgage Broker is experienced in Trust structures.
Richard Taylor | Australia's leading private lender
TMZ
What type of Trust are you using and where will you be buying i.e Metro / regional.
Many lenders no lend to certain Trusts.
Max exposure for LMI varies from lender to lender.
Richard Taylor | Australia's leading private lender
TMZ
I think financing an IP loan at 100% + days have unfortunately gone unless you cross collateralise the existing security and offer this to the Bank as well.
I would however offer caution to this statement as it will come back to bite you in the end.
Also remember LMI will have a limit as to the cover they will provide you so this will also limit you going forward.
I am assuming that non of the Trustees have any other property from which they could access equity to contribute a deposit.
Richard Taylor | Australia's leading private lender
Hi Pete
ATO would have no issue but to protect you both i would document it properly.
You could even get a Mortgage drawn up and just elect not to lodge or register it.
Richard Taylor | Australia's leading private lender
Hi Triggerman
Welcome to the forum and i hope you enjoy your time with us.
Couple of quick answers:
1. If I convert to IO plus offset, can I claim the interest? Yes you can on the balance.
2. What fees are involved to convert my loan? This will depend on who your lender is and the terms of the contract
3. Would I be paying LMI again? No but might have to pay an adjusted premium.
4. What would happen to the principal that I paid? This will merely stay as a principal reduction.
5. For a townhouse built 8 years ago, what sort of depreciation would I be expecting? Hard to answer without knowing the original construction cost. If you worked on around $1000 / sq Metre for something built 2000 you are not going to be a million miles away.Subject to you coming up with a deposit and acquisition costs then you would appear to qualify for a new IP loan.
Richard Taylor | Australia's leading private lender
Well in respect of a cash outlay it would be – geared.
$1700 / month (which i assume is P & I so IO would be less) repayment V $310 / week or $1342 / month Gross (net of Managing Agents costs would be slightly less).
However without knowing the amount you can claim from a QS report in respect of Depreciation, BWO & your initial loan costs etc it is difficult to answer precisely.
Going to be relatively line ball.
Richard Taylor | Australia's leading private lender
WW
Welcome to the forum.
A Company Title Unit involves the ownership of shares in a company set up exclusively for the purpose of ownership of a specified property whereby the owner of shares in the company has right to occupy (or lease to a tenant) a specified unit or allotment with the overall property. Holders of company titles shares to not have the absolute right to ownership or a particular lot within the overall property. Their lot is assigned as an entitlement due to ownership of a specific parcel of shares.
Yes this type of security can be difficult to finance even impossible with some lenders.
Realistically you will be limited to 75-80% LVR with most lenders.
Richard Taylor | Australia's leading private lender
Hi I S
Firstly welcome to the forum and I hope you enjoy your time with us.
My 10 year old loves spongebob so i appreciate your Avatar.Whilst i dont intend to comment on either of the properties in regards to the securities themselves as only you know which one is more suited for you and the family I can certainly comment on the structure and finance bits.
Ok first things first.
If you have saved $20K I would not use this as deposit for your IP as the $20K cannot then be borrowed and the interest claimed as a deduction. You would be better off reducing your current loan by $20K and then reborrowing the $20K as part of your investment loan.
In saying this try and structure the loan so that the 2 loans are separate and the securities not cross collateralised.
Dont fear LMI too much as remember it is a cost of borrowing and when used in regards to an investment loan the premium is tax deductible alongside the other loan costs.
Obviously the newer the property the higher the original construction cost so therefore the higher the amount you can claim as a deduction however dont merely buy an IP on Tax deductions alone. On your current income your marginal Tax rate is only 30% so therefore will not make a real big difference.
Bottom line with recent increases in interest rates your serviceability will fall so make sure you dont overcommit yourself.
Richard Taylor | Australia's leading private lender
Hi Rache
Think we have made contact.
Richard Taylor | Australia's leading private lender
I asked the commonwealth bank about how much expected rental income they take into consideration when calculating serviceability, they said 80%, does this vary from bank to bank? YES
Does anyone have an idea on figures for "fixed living" expenses from banks might be for a couple with no children?
Most lenders use the Henderson Poverty Scale so for 2 Adults you are looking at around $1380 -$1400.
Richard Taylor | Australia's leading private lender
Pete
> 80% LVR will normally require LMI and neither of the big mortgage insurers will provide cover to a Non resident.
There is nothing to stop your partner to lend you the money from her LOC at the same rate as she is being charged and then both of you can claim the appropriate deduction. You can then refinance if and when you have a permanent Visa and repay the loan.
With regards to the equity question she would be better off to increase her LOC and do as suggested above.
Richard Taylor | Australia's leading private lender
GOM
I am with you.
Richard Taylor | Australia's leading private lender
A new provider of the same information was launched a couple of weeks ago although is considerably cheaper.
There name escapes me at the moment but i will post it as soon as i remember.
Might be worth checking out.
Richard Taylor | Australia's leading private lender
