Nathan

Why don’t you consider a shared equity loan whereby you can live in a house with a purchase price of say $400K yet only repay the loan on say $300K.

This will give you access to additional monthly income which you can use to start investing. The loan would need to be for a PPOR and you would require a 5% deposit but you would only make repayment on 75% of the purchase price with 20% of the loan requiring no repayments and being charge No interest.

You could either buy where you want and save each month or alternatively buy a better house for the same monthly repayment.

The areas are very post code restrictive and have a maximum loan in each area but might get you into a PPOR as well as IP at the same time.

Let me know a post code you are looking at and I can tell you whether it is ok.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Hi Phil

As Marc has mentioned why would you go to the expense of selling (incurring agents fees) and then incur stamp duty again by buying just to try and get something that is going to give you positive cash flow.

If you think you own PPOR wil increase in value over the years then by all means rent it out and you go and find somewhere to rent.

The rent you will receive will be more than the mortgage repayments so it will be positive but you will have to pay rent to someone else.

You can keep the tax free status of your own PPOR by renting it out for 6 years before you trigger any CGT so you might decide to rent it out and then move back in at any time within the 6 year period.

In saying this you wouldnt be getting anywhere unless you borrrow against the equity start the process all over again. By all means move out and rent and receive rental income on your own home but don’t leave it at that otherwise you are going nowhere fast.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Stu

Couple of options:

1) To avoid LMI on an IP purchase then you will normally require 20% plus costs. On a $300K property this would equate to somewhere in the region of $75 – $78K.

If you accepted the loan would be mortgage insured then you may get away with a lot less. Some lenders will lend 100% on IP’s you still need to come up with the costs and charges. Remember LMI is a tax deductible expense and often a cost of getting ahead.

2) You could look at swapping your standard home loan to a shared equity style loan and releasing some funds to enable you to lower your monthly repayments and start investing. You would release some equity and this would be used for your deposits.

3) Keep on saving and wait until you have sufficient funds but realistically that may take a long time. In the meantime ensure you have your offset account in place and pour money into this account to save as much interest as you can.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Eddie

You dont mention whether the property is a PPOR or IP but clearly if it is your PPOR you would presumably merely be selling one to buy another with all the associates costs, fees and stamp duties.

I would argue that if you sell you will actually come out with less cash in your hand as you could refinance to 95% if you wanted to and i am sure with agents fees and stamp duty you will use up more than 5%.

If it is an IP then why not get set up correctly from day 1 and as Marc mentioned then you buy and forget your IP’s with little loan mangement.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Alistair is a regular contributor to the forum so if you need someone in the immediate area take him up on offer for a chat.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Empty that is the problem.

Once you have the first IP X ed you cannot buy again without uncrossing or just continue along the way.

it is the first structure that sets the scene for the rest of your investing days.

If you only have the 1 IP then certainly reconfigure the structure to ensure that it is not crossed but whatever you do do not leave it like that.

Do it now and it will not cost as much as doing it in the future and if you see a property which you consider to be undervalued and need to move quickly then you can do so.

If the loan stays X ed then all you are doing is digging a bigger and bigger whole.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Devo

To answer one question at a time:

1) There are many types of Trust structures. If you hold a property with positive cash flow or run a business with cash flow then simply a Discretionary Family trust maybe suitable.
If the property you hold is negatively geared and you wish to claim the interest dedcutions then a HDT or Hybrid Discretionary Trust maybe more to you needs.

2) Most lenders wil encourage you to offer the security of your PPOR or other IP when you are borrowing the full purchase price of any new property but this is not always necessary and is certainly not required.

To give you an example i saw a client of Friday who had 4 properties with one of the big banks under their lodoc 60 scheme. He now realised the properties had gone up in value and wanted to use the available equity to purchase another property.

Of course his Bank was is reluctant to offer him any more money although he had over $500K in available equity.

Structured correctly he would have easily been able to go to an 80 / 85% lend and keep on acquiring properties.

This is just one example and i can think of many many other examples. Imagine you decide to sell a property down the track that has gone up in value becasue you wish to realise some cash for other projects. You are also aware that you will incur a CGT libaility and therefore now how much of the net proceeds you need.

At settlement you Bank turn around and tell you that they don’t lend as much as they use to in an area where you have your other IP’s they will require the cash funds to be repaid or held as security given your borrowing.

This has defeated the whole purpose of selling and now you still have CGT to pay from somewhere.

There is not enough space on the forum to relay to you all of the horrow stories i have come across in all my years in finance but as i say a little time sepnt doing in correctly will save you thousands in the long run.

As i have offered to many previous posters I am always happy to have a look at your structure at offer some recommendations. This if course is totally complementary and not a tout for business.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

GR = Gross Realisation or end valuations

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Wonderful i guess if you live in sunny Richmond but not much in good old Australia mate.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.

Freeman – Yes of course it is for all members young and old and everyone welcomes debate and opinions.

It is just frusterating when someone posts something that is clearly incorrect and potentially damaging to those who read.

Financing your IP and PPOR is a big decision and getting it wrong can be costly.

You obviously have no idea who I am and why i am here.

Just as a little background i have been a member for over 8 years and enjoy assisting members and contributing with advice and opinions on many property and investment related matters.

I have no need to tout for business or push my own barrow but am keen to ensure that members get accurate advice from fellow members.

Ok now to answer you post as clearly your mate didnt bother to advise you how using an insured lender can limit your future investing.

Every time you use a securitised lender the loan is insured (whether you or the lend pays the premium is neither here ot there). As there are only 2 main insurers each of these have a lending maximum. Once you have reached that maximum then you will be unable to borrow again as the lender cannot get cover for your loan.

If you use a lender that does not insure EVERY loan then you have more freedom and choice when you want to grow and the lender says NO. (V8Ghia has already spelt this out)

Also did your mate suggest the loans be cross collaralised ?

I am interested to know what advice he gave in property investing because I cannot see from their website that they hold the appropriate License to offer Financial Advice butmaybe i wrong and they just haven’t displayed it on their site.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.