Forum Replies Created
Hi James
Yes you should be able to get your own Bank to provide the equity loan but make sure you make your principal reduction conditional upon them approving the sub loan.
Last thing you want to do is pay the loan down only to find they wont approve and no you are snookered.
Do not i repeat do not cross collateralise the securities as it will only lead to issues down the track.
Personally I would probably use a separate lender to keep things clean.
Some excellent basis rate products doing the rounds at the moment without the Annual fees etc.
You can always switch products when you move in and have the need for the offset account and other loan features.
In regards to the interest claim and whether you pay down the current PPOR debt and then keep it as a investment unfortunately you can't have it both ways.
Only way would be to incur LMI on the investment purchase which is Tax deductible whilst the property is available for rent (Over a 5 year term or the term of the loan whichever is the shorter).
If you are thinking along this line however you are probably better off to get your Broker to run some scenarious as now the figures could change a bit.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi James
Yes make a principal reduction to your PPOR from your offset account and then take out a equity sub loan and use this as deposit for the IP.
Keep the loans separate and the interest on the entire 2 loans will be deductible.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Although a cash deposit which was offered as security and borrowed against as a Term Deposit would be deductible.
Of course whether you would want to is another matter.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Pagey
Yes not only does in not matter what the rate you are being charged but also the security you are offering to take your investment loan out against.
As i have said many times before if you get a lender to advance you the funds using the security of a pogo stick and the purpose was for investment the funds would be deductible.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Either genuises or shysters and i have money on the one on the right.
Maybe Jamie can enlighten us all after her has read his PM.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Interesting indeed as it simply work out as i cannot be done with equity / cash or some form of vendor rebate / financing.
Look don't have a problem with Vendor Finance in fact we have just started back up out Vendor Finance division to investors where they can borrow 100% of the Contract price on selected properties but it is like anything as long as everything is disclosed and the investor aware then fine.
This sounds very suspect to me and personally I would be getting your own lawyer on board to read thru the fine print off the purchase contract and the letter of offer from the lender before going unconditional.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
No point in going to a Financial Planner as unless they hold a Australia Credit License or are an Authorised Representative of an ACL they are unable to provide you with any Credit advice in relation to you mortgage or home loan choice.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi London
Assuming you are a resident of Australia how did you intend to finance such acquisition.
There is only 1 UK lender left who will finance deals to non residents even if they are UK Passport holders and their terms and conditions are extremely tough to meet.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Catts has in 1.
It is aimed at the investor who wants a hassle free investment and doesn't mind paying for it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
DK wont be an issue claiming the interest on a personal loan if the funds are for investment however in response to Pagey's question you will not find anyone offer a 70K personal loan without substantial equity.
We are doing a lot of deals at the moment for clients who are looking at renovating where the loan comes with a 20k credit card which can then be used to improve the property or put into a deposit for the next deal and turbo charge your portfolio with little or no money down.
Very useful tool for investors starting out but needs to be on certain properties.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
HI Harry
Welcome to the forum and i hope you enjoy your time with us.
Whilst you idea is a good hate to say you wont be able to do as it would require the consent of all other owners to reconfigure the Lots to allow for a further unit.
Each Lot has an entitlement and you cannot create an addition Lot without consent of not only the owner but also their financier.
I have done exactly what you are suggesting however i owned the whole block of units and therefore did the reconfiguration prior to selling off the individual units.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
On a separate issue are you sure you can get a 95% lvr in Chinchilla?
Done a few deals up there and must admit off the top of my head didn't think the MI would go past 90%.
Certainly if it is Gemworth they wont be doing in interest only these days.
Course always happy to be proved wrong by 95% in a Trust structure call me old fashioned or what but not from where i am sitting.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Maloose
Funny you are not the first overseas forum member who has posted such a question over the last few weeks.
We have a couple other Expats member we are sourcing / financing investment properties for who are in the same position and my advice to them has been similar.
Preserve as much of your current capital as you can and look at a 90% lvr as remember when you do return you want to maximise your deductible debt and minimise your non deductible interest.
As far as the areas you mentioned just be careful you are jumping in at the end of the cycle for the applicable area.
There are plenty of areas where yields appear high but they bring with it associated risk.
Personally as a distance investor (I still have a property in the UK) i like to ensure my asset can ride the ups and downs of the market whilst still giving me an acceptable return. It is for this reason i am not convinced i would be looking in the areas you mentioned but each to their own.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Matt a $200 positive gearing i assume that is per month.
Are you sure it is not a Display home with a leaseback arrangement or similar and if not you must be putting in a decent sized deposit.
Are you sure you want to put that much in ?
Remember over and above the cash deductions you will also receive non cash deductions you can claim such as Capital Allowance and Depreciation claims and this will aid your bottom line in terms of cash flow.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Laura
Can i ask you what you are wanting from your Accountant.
Remember he is unable to provide you with Credit advice or Financial Planning advice unless he is Licensed to do so.
Sure he can give you some information on Tax structures etc but if you can't borrow the money or get the right loan structure it really doesn't matter.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jared
Welcome to the forum and i hope you enjoy your time with us.
Regret to say neither of the mortgage insurers will provide cover on such security so i hate to say you wont get more than 80% lvr.
To be honest depending on the actual size of the property i am surprised you have had anyone offer you more than circa 60%.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Havinfun because there is no one else out there with the appetite for the risk.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Steve
You are welcome to ring / email me mate and be happy to assist.
Have to say i wouldn't use Wesuck if they were the last lender on the planet as their serviceability and credit models are a joke for investors.
What you have to remember is to build a portfolio there is more important things to consider than the bottom line interest rate.
The loan structure is probably the most important factor as if you get that wrong you will be going uphilll very slowly.
With your own funds if the numbers don't match p you are better off paying it off your PPOR and then setting up a separate equity loan for the same amount.
Of course your Banker will have no idea of why you are doing this and even iif we explain it to them in plain English wont get it but that's Banks for you programmed to work on what is best for them and not you the client.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Stevo stevo stevo hold right that my man.
Are you telling me you are going to tell me you have a non deductible debt and are going to put in cash to your new IP. ……hopefully not.
Pay down the PPOR debt by 30K and then take out a separate IP equity loan for the same amount. Now you have $30K of deductible interest each and every year.
Now in regards to the LMI question it is hard to answer this without have all of the facts to hand but it sounds like you could shop around and get a cheaper LMI premium.
Whilst in the main there are only 2 insurers (ok i will grant you there are a couple of lenders self insuring) each lender has it's own premium rate negotiated.
I can think of one product that would be an 80% lend and then give you a further 10K unsecured at home loan rates. This gets you around the LMI issue yet you still borrow more than 80%. Difficult to assess of course without having all of the facts to hand.
Whichever way you go think careful as whilst it is a deductible expense it is still an upfront payment and if you can minimise it why wouldn't you.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry guys i have 1 or 2 properties in the Brisbane area and as Darryl mentioned for 300K you will be lucky to buy a garden shed let alone a decent IP 5-6 km's from the City.
We struggle to source properties in that price range for our clients anywhere with the exception of the South & North of the City.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
