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All I can say is that the broker probably lies to get you to meet with him on the off chance he could put something together for you. As far as I know, it is impossible for a recent bankrupt to get 100% funding through standard or non-conforming lenders.
Do you have any other family members who can help with cash or equity???
The Mortgage Adviser
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Essential LinksWhat you are asking does not make real sense to me. You seem to be wanting to get a LOC and then refinance another loan to pay the LOC.
The simplest structure is as follows…
Loan 1: Interest only loan with offset account for non-deductible debt.
Loan 2: Interest only loan for deductible property purchase price.
Loan 3: Interest only loan with redraw for deposits and other deductible expenses.I am not a fan of using a LOC at all unless you cannot find a loan with free redraw and the cost of redraw would cost more than maintaining the LOC (highly unlikely).
The Mortgage Adviser
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Essential LinksVanessa, you will also find the information you learn here is a much better price… FREE!!!
The Mortgage Adviser
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Essential LinksThe only thing that confuses me is why on earth you are using LOCs. They cost too much in interest and ongoing fees and charges. You can do the same with standard interest only loans for a lot cheaper in most cases.
As to a limit to doing this, you are only limited by serviceability. As long as your income from work and rental income can meet the repayments, you can keep going.
The Mortgage Adviser
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Essential LinksThat is why I stated “in most cases”. Some situations are very difficult.
I am wondering, when the broker told you about the 100% finance, did he know about the bankruptcy and the minimal savings?
Also, how long ago were you bankrupt and how long ago were you discharged?
Why do you have no savings if you have no debt and a good paying job?
The Mortgage Adviser
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Essential LinksNo, I was referring to the people you over-heard. Maybe they were just jealous.
The Mortgage Adviser
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Essential LinksI think someone buying 14 properties would be a little bit smarter than a few people chatting near by who you have no knowledge of. Many of the same conversations were heard in many regional areas prior to prices becoming unaffordable for locals. People always put down what they cannot do themselves.
The Mortgage Adviser
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Essential LinksFor a fully documented loan, the maximum interest rate should be no more than 6.75%. You can get down to 6.62% with package discounts for higher loan amount totals.
This disregards intro rates which revert to higher rates after the discount period.
The Mortgage Adviser
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Essential LinksRegarding Geraldton, I bought there myself and I will tell you some of the reasons why…
* One of the largest cities in WA
* Harbourside city with excellent boating facilities
* Extremely cheap prices in comparison to similar areas
* Strong population numbers with large tourist turnover
* Housing commission areas being distributed so there are no huge housing commission areas in one spot
* Largest TAFE outside any capital city in Australia
* One of the best agricultural education centres in Australia
* University expanding to a full blown university
* Council spending up on facilities like parks etc (at least in the area I looked at
* Main stopping point between the top half and bottom half of WAThere are many other reasons why I bought there which include particular numbers on the property I looked at. Just because one person or the locals cannot see the potential of their own area, it does not mean it is not a potential gold mine for property investors.
Most investors look to regional centres when the property market is in a huge slump as the worst impact is usually felt in the capital cities. Investing in regional centres should be part of any investors property portfolio to help diversify a portfolio within an asset class. If city prices go down and regional prices still go up (or vice versa), things start to look rather stable.
I am very content with my purchase in Geraldton.
The Mortgage Adviser
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Essential LinksNo they cannot and will not give you the vendor’s details. You can knock on the door if they live there or do a title search at the Land Titles Office and find out yourself.
The Mortgage Adviser
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Essential LinksLuke, it is nice to use figures from the local Council who have a vested interest in making the area appear to be much better than it actually is. I am far more content with using impartial figures from the ABS (even though a little old) which indicate:
‘In the June quarter 2002, the room occupancy rate for total accommodation types was 56.4% in the Gold Coast TR (0.2 percentage points higher than in Queensland). Room occupancy rates by accommodation type ranged from 55.0% for motels to 56.0% for licensed hotels and 57.6% for serviced apartments.’
I will reserve my judgement on current trends until I see an impartial report.
In any case, you stated 69.5% in 2004 as a record high. I will certainly not be basing any investment decisions on a record high nor will I be content buying property in an area where the tourists out number the locals.
Using your figures, you would need to cover all your expenses in less than two-thirds of the year (best case scenario). In reality, such properties will be occupied for less thn 69.5% of the year unless you are paying top dollar for an over-inflated property that would be in demand.
If you seek a local to rent your property, the achieveable rent will be extremely lower than holiday rentals so the returns would be absolute rubbish!!!
The Mortgage Adviser
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Essential LinksSpeaking in riddles does not answer the simple questions put forward. Not everyone can easily identify a ‘snake oil salesman’ nor do all the high cost seminar presenters deserve their fee.
In one breath, you are saying we should be able to identify the shonks while in the next you are saying we should stop whinging about the shonks. If we do the latter, how do we determine the former?
Talking in riddles is fun!
The Mortgage Adviser
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Essential LinksYes, there is a form to get your employer to pay you more each week (tax you less) if you have a deductible investment property. I never remember the form number but I am sure someone will pop up with a link to it. It is very commonly used.
The Mortgage Adviser
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Essential LinksMarc,
I am very interested in your opinion as to seminars that present themselves as providing the ‘secret to success’ or educational content and. when you get there, they just want to sell you property or some ridiculous ‘system’ that will ‘guarantee success’.
The Mortgage Adviser
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Essential LinksDazz, I think you are missing the point. Regardless of experience, commercial property is a riskier investment when compared to residential. Experience and knowledge just helps an individual control that risk better than others as I outlined regarding shares.
If you believe my opinion as the sole judge is an issue, pick someone you trust to make the decision. You seem to think you could show a greater demand for commercial property so it is in your interest. Remember, supporting evidence is required (ie: Government stats).
The Mortgage Adviser
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Essential LinksDazz, regarding risk profiles, these are not only a reality but they are entrenched in various legislative documents.
If you are seriously telling me that commercial investment property is lesk risky than residential investment property, I would say you need to go back and learn more. The yields are higher for a reason. Higher yields do not equate to lower risk.
If you could show me with supporting evidence that the number of commercial tenants in Australia are higher (or even close to) than those renting residential properties, I will eat my computer and never post in this forum again.
Lower demand equals higher risk!!!
The Mortgage Adviser
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Essential LinksI would probably up miscellaneous expenses a bit and lower the interest rate (on current rates) but otherwise seems pretty spot on.
Don’t forget to allow for tax deductions against your income and it will look even better especially if you get the benefit each week with your income.
The Mortgage Adviser
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Essential LinksTry the How Much Can I Borrow calculator…
http://www.mortgagepackaging.com.au/tma/index_files/tools_and_calculators.htm
The Mortgage Adviser
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Essential LinksAn offset account is a seperate account. It operates just as a normal transaction account. The difference is that the offset account is attached to the loan. Whatever is sitting in this account will have the same effect as you putting the money into the loan.
The reason why it is better to use an offset is as Simon has outlined. If you make the principal payments to the loan, it will be deemed a repayment. If you only pay the interest and put the extra funds into the offset account, it will not be considered a repayment.
Say your loan was $100,000 and you paid $10,000 in principal into it over a year (plus the interest), you would only owe $90,000. This would be deductible if you moved out.
If your loan was $100,000 and you paid $10,000 into your offset and only paid interest into the actual loan, you would still owe $100,000 when you moved out but you would only be paying interest on $90,000. You could take the $10,000 out of the offset if you want to increase your deductions and put it into your new PPOR.
It sounds complicated but is really very simple and automate once set up.
The Mortgage Adviser
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Essential Links
