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  • Profile photo of Robbie BRobbie B
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    @robbie-b
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    I think I would prefer paying the minimal ongoing tax expense as compared to the large upfront stamp duty expense by selling to myself. Using the property to make additional investments would probably be more beneficial and the rental income would reduce the non-deductible debt fairly quickly before ever being required to pay the tax.

    I say keep them both and use them for more investments if you can afford the repayments.

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    If anyone tries to tell me that Campbelltown does not have a bad reputation, I would say they are smoking too much of the funny green stuff!!!

    Everyone I know thinks poorly of Campbelltown. Crime statistics support this. Being required to show identification at a club at night to be issued a ticket to be able to catch a cab home also supports this.

    Even with all the negativity, it still has some good investment potential. Most of the growth was as a result of the M5. I personally don’t know where the continued growth in this area will come from but it seems to be bucking the bad rep slowly.

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    Hey MIT,

    Why do you prefer selling your home to buy another when you can own both? Are you content with one property?

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    I think you will find that PRD get the information from RP Data.

    RP Data has a reputation for being about 3 months behind the times. The best research is done by following the auction clearances in the newspaper and the for sale advertisements.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    You will still pay tax on the rent from the unit and lose deductibility on the house mortgage. What else do you want to know?

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    As long as you have a standard loan, there is no problem with you moving into the home. The bank won’t care as long as you make your repayments on time.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    Originally posted by markbarnsley:

    1) Legal costs
    Vary between about $600 (Conveyancer) to $1,500 (Solicitor) for a standard conveyance

    2) Loan application costs
    Average is around $600 for a standard loan.

    3) Mortgage registration
    Less than $100 in all States

    4) Mortgage duties
    About 0.5% of the loan amount.

    5) Building Inspections
    $200-$500 for basic inspections.

    6) Council rates
    Change drastically depending when you buy – amount is pro rata for what is still owing at date of purchase.

    7) Utility rates
    Depends on what you use – electricity, gas, etc.

    8) Insurance premiums
    Again vary greatly from insurer to insurer but a few hundred dollars per annum for a $300,000 home should be about right.

    9) Maintenance costs
    How long is a piece of string? This depends on the property condition.

    Don’t forget Transfer Stamp Duty which is about 3-4% of purchase price.

    Some calculators at the following site may help…

    http://www.mortgagepackaging.com.au/index_files/tools_calculators.htm

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    Depending on your required LVR, low doc loan rates can be the same as full doc loan rates. The maximum LVR for these cheaper rates is 80%. Unfortunately, you may be required to pay mortgage insurance as banks are now required to mortgage insure all low docs over 60% LVR.

    You sound like you are a doctor who recently completed their education. There are high LVR loans (95%) available to doctors or others in professional fields who are starting out. The lender does not charge mortgage insurance on these loans as they are willing to take the risk on your education.

    Find a good mortgage adviser to help you.

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    I have never heard Steve speak of the benefit of P&I loans nor can I think why he would advocate this. I personally prefer and advise others to utilise interest only loans if they can control their spending.

    Benefits include reduced ongoing liability should things get tough, greater flexibility, maximising deductibility (where necessary), enabling faster payment of non-deductible debt (if applicable), less expensive when pursuing additional investment funding and less expensive to access cash (if required).

    I would be interested in hearing Steve’s reasoning for P&I loans here.

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    60 years is the minimum now. I would probably steer clear of these as they just eat into your assets so less is available for your estate. Also, the younger you are, the less you can get. For example, at age 60, the maximum LVR would be around 10%.

    Also, age limits relate to the youngest person living in the home.

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    Hi Byron,

    Why would you say that?

    Do you not consider this a good conservative investment for a less experienced investor?

    Robert Bou-Hamdan
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    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    If serviceability was not the issue, refinancing to the maximum would certainly be a viable option. I would avoid going over 80% though to stay away from mortgage insurance unless you knew you could cover this expense through your investments.

    The PPOR is almost maxed out anyway and has fixed rates which may incur break costs if moved. There is not much flexibility there anyway when considering LVR.

    Unless staying with the same lender and seeking loan increases, there will usually be substantial break costs all around but when considering the rate of the fixed interest loans, I don’t think anything will be charged for breaking these loans.

    Y will have to pay more interest on existing loans if refinancing so there is a lot to consider.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    Thanks Antonio,

    That is a great example of more conservative calculations. I agree that taking the inflation rate out of the capital growth as it accrues is more prudent and the correct way to do it. I was going to do the calculation this way in the 4% growth example. It makes a MASSIVE difference.

    I was also going to include something about the opportunity cost of the negative income position while holding this investment. A few less beers per week for some investors can be a deal breaker! :)

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    The tax implications will be that you have to pay tax on the rental income if it is more than what the property costs you to maintain.

    I do not consider this as a problem as the more tax you pay, the more you earn. I wish I received a million dollar tax bill each year as it would mean I am earning at least 2 million in my hand.

    A good accountant will be able to help you minimise your tax liabilities and you can invest in various things to help you with this.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

    Profile photo of Robbie BRobbie B
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    @robbie-b
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    Hi Lea,

    I wish you all the best with the offer you made.

    Regarding your questions, the funds in the offset does not technically increase your equity. It just provides you with the equivalent amount of equity in cash. If you prefer the actual equity and don’t need the cash, you just transfer the funds to your loan. With investment properties though, I would never do this until I decided I want to pay out the debt and not invest further.

    Regarding reducing your level of debt, using the offset will not do this but it will decrease your required repayments (and your tax deductions). This is not a disbenefit with lenders when they see you placing much more than is required to service your loans into the offset account and not spending it. It might even be of more benefit when you do not need to borrow as much in one go for the next property because you have a heap of cash available.

    An investor savvy accountant can talk you through all the tax implications and a good broker can show you how to exponentially grow your borrowing capacity by using good lending packages.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

    Profile photo of Robbie BRobbie B
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    @robbie-b
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    $20k is more than enough. You can get 100%, 97%, 95% and lower finance. If I was you, I would be speaking with Simon Macks (Mortgage Hunter). He is a moderator on this forum, a mortgage broker and a good bloke. His specialty is defence grants and loans for defence personnel.

    Check his website at http://www.mortgagehunter.com.au

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

    Profile photo of Robbie BRobbie B
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    @robbie-b
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    Share dividends will not be considered as a stable income especially for a beginner. A company can cease to pay dividends at any time. You will need a job and/or rental income.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

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    Profile photo of Robbie BRobbie B
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    @robbie-b
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    You sign a contract subject to DA with the vendor. Anyone can apply for a DA on any property whether they own it or not as long as the owner (vendor) signs the application. It would follow that the vendor will sign if they want you to buy the property so you submit the DA application to Council to get a written response. Verbal advice is not worth anything as it does not ensure approval by Council.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

    Profile photo of Robbie BRobbie B
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    Hey SIS,

    You certainly love the gearing to maximum levels!!!

    There is a much simpler way to magnify returns from this investment by using an offset account when you consider the income earned being relatively high.

    Couple this with your plan to gear as much as you can when equity presents itself and you can purchase additional properties in a very short period of time.

    I think the negative cashflow position with each property using similar figures as the example would be a problem for some if they try to grow too quickly.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

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