Its not that normal, but does happen depending on the situation. If he’s likely to be clawed back he may charge a fee for service (ie if your developing to sell in short periods).

Your financing options of the top of my head:
1. Higher LVR loan – LMI works on an exponential like scale at high LVRs, so this will need to be considered.
2. Parental Guarantor if your parents have equity available that your willing to use. This way you could borrow 105% of the property.
3. Gifted funds (parents borrow their equity, gift it to…[Read more]

Hmm given the doubts, id steer clear away from this.

Cheers,
Redom

Interest rates are one of the largest factors that influence prices in the short term. By adjusting rates one way or another, the RBA can effectively manufacture a growth cycle or put a stop to one.

Why? Interest rates are effectively the price you pay for credit.

Because people need credit to buy houses. Without credit, there would be next…[Read more]

Think of it as a risk mitigation tool.

One of the biggest risks to cash flow for investors is interest rate risk. Fixing rates over different periods can manage this risk.

In terms of pricing, fixed rate market is very competitive at the moment. Years of cheap money around the world are flowing through to lower funding costs. Often people…[Read more]

Yep that’s how to set it up to avoid x-coll. :)

A few tips to maximise the structure your employing – it may make sense to:
a) get a couple vals done on your PPOR – often their are variances in valuations. May make sense to use the highest val.
b) If possible and suits you: turn your PPOR to I/O too – by reducing your contractual repayments,…[Read more]

I should note what others have said too – servicing calculators vary between lenders. The above are just some ‘soft’ rules to think about it.

Its gets technical, but brokers generally navigate around servicing calcs to build plans/borrow as much as possible. Brokers generally use a few tricks to make an applicants file look strong…but can o…[Read more]

3 year fixed reduces banks buffer zone? The buffer zone banks use to assess is the same regardless of what type of rate you have.

When you go and apply for a loan, banks will generally do an income/expenses test and want to see that your income > expenses.

Generally, banks calculate the expense for the new home loan at 7%+, P&I repayments -…[Read more]

Heya,

Good question. Brokers spend every day playing with these calculators. A few observations:

Adding income is the most powerful way to improve your borrowing capacity – other techniques (e.g. interest only, reducing bad debt, switching lenders) generally only help to ‘maximise’ to get you as much as possible for a given income.…[Read more]

Kinnon – I love that video!!! Watched it plenty of times. Thanks for sharing. :)

To OP – the question you’ve raised is awesome. I find it fascinating, and there’s a deep literature trying to understand it.

As others have said, learning how to make money is likely to yield you more fruit than learning how money works. Nonetheless, it is a very…[Read more]

Fair point Plummer. You could get 10-12 year fixes too though. To be honest i haven’t heard much about the mentioned strategy before. Would love to hear more from you and others. :)

Perhaps investing in asset classes that move in the opposite direction to economic conditions? I’m not too aware of this but: gold, gambling stocks, alcohol…[Read more]

Good to see someone thinking about risk management – very important, particularly in the middle of a boom.

Fixing interest rates on parts of your portfolio is a quick trick. Doing so, allows you to ride out a period and adjust your lifestyle/finances accordingly.

Cheers,
Redom

Hi NannyC – Kinnon’s definitely the expert on the Cairns market with a wealth of valuable inside knowledge.

Regarding Brissy – it does seem ‘primed’ for growth. Investors are flocking there away from Sydney. With next to no growth over an extended period, it really does seem to be the ‘market’ to be in.

Note that Brissy doesn’t quite have the…[Read more]

Alternatively, you could use the equity available (assuming 80% lends, around 160k) to fund your first couple house deposits. Then use your cash to go again, rather than ‘wait’ for equity gains – just because it doesn’t receive the same tax deduction, it doesn’t mean its not still very viable to purchase property.

Realistically, using 100k of…[Read more]

Heya,

Just be aware they are assumptions and forecasts being used – any investment carries risk.

Some of the calculation assumptions are nice to see, particularly the conservatism applied with the interest rate.

The capital growth rate is quite high – perhaps using previous 20-30 year price cycle dynamics to calculate todays price.…[Read more]

Give precium a call – pretty sure his the expert in this region.

Northern Beaches is a tough market to crack and has expanded quite rapidly over the past 24 months – it’s not a bad idea to look elsewhere. Lots of investors are moving up to Brissy in their search.

Cheers,
Redom

Hi eyelove,

You should be able to access equity in existing property – as others have said, just set it up as a split loan to separate deductible and non deductible debt.

By the sounds of it you’re having serviceability issues (borrow cap). You could go to two separate lenders for the equity release of your existing property and your new…[Read more]