Allan,

I am truly sorry to hear about your father passing. However, my position remains the same. I do not tread on eggshells in any situation as I believe the truth is always more important than anything else in life. If you consider this self-righteous and immature, I pity you even more.

By the way, I did read and comprehend what you wrote. You were worrying about money when your father was dying regardless of how the situation arose. What you think of me and my response aside, am I wrong in my comprehension of the situation????

It was pretty black & white to me.

TMA

Deposits have absolutely NOTHING to do with agent fees. An Agent does not get paid until settlement. Securing a deposit does not mean a property will settle.

TMA

I don’t know if it is a “magnet”… maybe the belly is just so big they bump into it. Probably more of a ‘dodgem car’ than a “magnet”!

In any case, I am more than happy with my girl!

TMA

I thought I should add a bit more just to demonstrate my point…

Why earn 5.50% and pay tax on it when you can save 6.50% by parking money in an offset and get to your next property sooner while maximising deductibility when you take the money back out?

Just so you know, if negatively geared, paying out the 6.50% can only recover less than 3.25% so you are really behind the ball by about 6.00% on your spare funds after you are taxed for the income earned on your “high interest accounts”.

Is there an emoticon to respond to this?

Just so you know, all I was trying to do was help you with a better deal!

TMA

They said mobile phones were totally safe yet we are seeing a major increase in headaches and stick cancers!

I remember asbestos was also once considered safe!

TMA

I don’t think anyone got ‘hammered’!

TMA

This is very old. You should see what they have been doing for years in Sydney. I think these idiots are half breeds with a spider!

TMA

You sort of have it right.

I would do the following all at once…

PPOR – 80% LVR
Loan 1: $172,000 (Non-Deductible)
Interest Only Loan with Offset Account

IP 1 – 90% LVR
Loan 2: $53,000 (Non-Deductible)
Interest Only Loan
Loan 3: $203,500
Interest Only Loan

IP 2 – 90% LVR
Loan 4: $57,600
Interest Only Loan

Once all loans are covered and the new purchase price is paid, you should have $18,500 left over. Out of this money, you need to pay the LMI, loan application fees and charges, closing costs on the new purchase, etc. There will not be much change for renovations but you get your second investment property.

Once everything is setup, there will no be much to redraw. It should all be sitting in Loan 3 and this money should ONLY BE USED FOR deductible expenses.

All income from work, rental income and any other income should be directly deposited into Loan 1’s offset account. Direct debits should be set up to make all the interest only payments on all your loans. Do not draw funds from the offset account for deductible expenses. Wait until you can increase Loan 3 or 4 for these expenses.

Do not mix up deductible and non-deductible debt!

Any half-decent broker can get this sorted for you assuming your serviceability will not pose a problem.

TMA

Uncrossing properties is easy to do if each one stands up on its own. In your situation, this is not the case. One of your properties would be over 100% and the other much less. Even if you spread the debt, they would still be over 80% LVR.

BankWest do lend more than 80% LVR with LMI but you can always go elsewhere if they will not help you. You can easily spread the debt and keep deductible and non-deductible debt separated using splits. This would uncross your properties.

Personally, I would put 80% LVR on the lowest valued and/or slowest growing property and take the other property to 90% or 95% to help buy the next property and do whatever renovations you want. Also, put 80% on the new property (or 90-95% only if you need it). This would minimise the LMI payable across all loans as each property is dealt with separately.

As for why I hate BankWest, my most recent experience with them was disastrous. Their service was very slow and extremely poor. Their lack of communication and incompetence cost me money and stress from my clients (who were existing clients of BankWest). They were impossible to contact and rarely returned contact even when the matter was escalated. It was only when I threatened to sue them that things were finalised within a week. I threatened to sue them as I told them the clients threatened to sue me and the delay was as a result of actions way beyond my control and way outside their SLAs (service level agreements).

Having said that about BankWest, I hear many brokers speak highly of them. This was possibly just one of those problem loans that happens every now and then with any lender but it was the only time I used them. I have never considered their products to be the best so have not needed them and only used them this time for a loan increase because the clients had fixed loans and cross-collateralised properties tied up with them and did not want to pay break costs to go elsewhere.

Things can go sour with any lender for any number of reasons. I just did not agree with the way they dealt with the issues we faced.

TMA

No. You can only get a refund when you sell.

TMA