It is always important to look at the area you are buying in. If a town has no employment, it will be difficult to make any money there.

As for your finance questions, they were answered above. You could also have a read of…

http://www.mortgagepackaging.com.au/tma/tools_and_calculators/TMA_Low_Deposit_Lending.doc

As for the lenders’ names, I would much rather see you speak with a mortgage adviser / broker than try doing it yourself. It can get very expensive very quickly if you make the wrong move at these high borrowing levels and I don’t like your chances of being successful to purchase in a country town that lost its industry borrowing at such high LVRs.

The Mortgage Adviser

Not as far as I know. When property is in a company name or trust name, it is a seperate entity and automatically is considered as conducting business. The ATO cannot tell you how much ‘product’ to buy as a business before it is deductible.

Like I said, I am not an Accountant.

By the way, ‘avoiding’ tax is legal, ‘evading’ tax isn’t.

The Mortgage Adviser

If you have already signed the contracts and want to change the buyer’s name, you will have to pay stamp duty again. An option would be to ask the vendor if they will allow you to sign a new contract in the new name and just cancel the old one. They should not have a problem with this as they will still get the same result.

An interest only loan with offset account is merely a simple loan with a seperate account attached. The only money you pay into the loan is the interest. All your additional funds from work and rental income go into the offset account. As the balance increases in your offset account, the amount the lender calculates interest on is reduced by the balance in your offset account.

Risks include over-spending or mixing deductible and non-deductible debt. Over-spending is an issue of control and can occur with any loan product where there are excess funds. Mixing deductible and non-deductible debt can be avoiding by taking a split loan (second interest only loan) which is just used for deductible expenses.

The biggest benefits of using offset is reducing your non-deductible debt expense and that when you move PPOR, you just take the cash out of your offset account and the loan amount is still at the maximum limit but now deductible.

Any decent broker can show you exactly how all this works.

For a diagram of how it will look, have a look at:

http://www.mortgagepackaging.com.au/tma/index_files/professional_and_other_loan_packages.htm

By the way, I am not an accountant so please seek advice about what you choose to do especially with the changing name of the property. This has many tax implications (usually more beneficial) which are only worthwhile if the figures stack up as Luci has pointed out.

I hope it all works out for you.

The Mortgage Adviser

It means that you applied for a credit card on May this year and they did a credit history check on you.

The reason you may be getting rejected for a loan may be due to serviceability issues (ie: your ability to repay the level of debt you seek may not be sufficient) or that you have not disclosed a credit card on your application form but they see it on your credit history.

If you did not apply for a credit card with Westpac, you can have this removed by contacting their card services division.

Maybe, there is something else on your file further back that the lender might not like.

As Simon suggested, you should probably sit down with a mortgage adviser / broker and sort it out but stop applying for credit in the mean time or things will just get worse with every new enquiry that does not result in a loan or credit card being approved.

The Mortgage Adviser

See what I mean Luke?

And Luci is polite!!!

The Mortgage Adviser

Planing, nice find. I did not even know there were posts there about Derivex.

Jason, I don’t think anyone is a ‘Derivex’ advocate as Derivex is just a company name. As an Interest Free Loan Product ‘researcher’, I would say that that person has really no idea how it all works although the 20 to 1 gearing is part of the overall structure.

As I said earlier, I will not go into how it works with anyone as it just causes trouble.

The Mortgage Adviser

I can see exactly how to buy and sell without deposit. I just think it is a ridiculous idea. You suggest I have a lot to learn, but I think it is you who needs an education regarding basic contract law and the cost of litigation should things fall over.

You ignored a scenario I put to you. I will offer another…

Say someone offered to buy your property for $200,000 with no deposit and a 6 month settlement period. You chose this person over 3 others offering the same.

Disregarding the subject-to-finance clause, during that time, they lose their job and want out. Also, the RBA increased the cash-rate three times and a plane hit centrepoint tower and took out the financial sectors communications for 2 weeks.

Your property drops in value to $180,000 as people are trying to sell at any price and you need to sell. The best offer you can now get is $175,000 with another 6 months settlement.

Another plane takes out your local shopping centre and the RBA increases rates by another 3%. Your property value comes down to $150,000 and the new buyer has gone bankrupt. What would you do????

Would you be telling me I have a lot to learn?

What would I do?

Would I be laughing at you for not getting a 10% deposit?

Regarding me finding better people to buy off, I have never asked for no deposit. I always offer $1,000 per property or nothing with long settlements. I always get it or I don’t buy that particular property. It is called ‘consideration’ to ensure the contract is enforceable from my end if the vendor tries to ‘gazump’ me. Do you know about ‘gazumping’???

Regarding deposits, of course I would never give them back if someone pulled out of a deal for no good reason. I have never encountered this so it is not an issue. I can assure you that they would need a damn good reason for wanting it back if they didn’t have an out in the contract because it would have cost me money. Selling property is not a charitable business! I am starting to wonder who has a lot to learn????

With regards to your $100,000 this fin year from 2 sales, I made more than that with none. Who cares????? I prefer custom mades though (no pipes)!!!

I suppose you also sell a car without a deposit as well? Do you let the buyer test drive it without providing you with their ID or license?

The Mortgage Adviser

Whatever!!! <—- A very intelligent response!!!

The Mortgage Adviser