Forum Replies Created
dmichie, take a pill and chill mate.
If I was saying that, I would have wrote that.
We are discussing the current market and my comments refer to short-medium term economic outlooks.
However, if Labor wins an election, I would be predicting a rescession within 2 years.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by g7:You should probably be able to take out a Line of Credit (LOC) on the property (once it’s in your name) and invest with that as long as you can afford to make the repayments.
A LOC is generally cheaper than a typical stand alone mortgage and is a good way of using equity to expand your property portfolio.However, as you’ll be receiving quite an expensive gift and a huge kick start from your parents, invest wisely, do your research and dont squander or lose it.
Good Luck…G7
Avoid a Line Of Credit. There is no need to use one in your situation. G7 is a little confused as a Line Of Credit is MORE EXPENSIVE than a typical mortgage. There is no debating this point as it is fact.
If you do need to transfer your parents’ investment property to your name (eg: as a result of pension issues), your parents will incur Capital Gains Tax. You will also incur Stamp Duty if you do not live in it.
Some creative ideas…
An alternative while your are learning about investing is to ‘purchase’ the property from your parents, take advantage of the FHOG and ‘live in it’ for 6 months and then move back to your parents place. You then get a 6 year capital gains tax advantage, save on the stamp duty and have the property in your name with plenty of equity to use for further investment which you can use even while you are living in it.
Talk to a creative mortgage adviser and they can help you more than you will ever know.
Please keep us updated.
Robert Bou-Hamdan
Mortgage AdviserYour little ‘real terms’ inclusions in brackets are of no consequence. As has been said numerous times, there is evidence to support or refute any economic theory. I believe Australia will not experience a recession and certainly don’t believe a property ‘bubble’ will burst. At worst, some air is escaping.
Regarding the mortgage broker bias debate, I am happy to discuss this in a new thread. Feel free to start one and ask any questions you feel require a response and I will be happy to answer them.
Robert Bou-Hamdan
Mortgage AdviserJules, you only need to live in the property for 6 months to not lose the FHOG benefits. You can turn it into an investment property sooner. Alternatively, you can rent it for just under 12 months and then live in it for 6 months and still not lose the FHOG benefits.
Matt, to simplify it, if you move out of your PPOR and buy another one, the 6 year exemption does not apply to the first property. It now applies to the second. The only way to get the complete benefit of the 6 year exemption is to not move into another PPOR for that period.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by dmichie:Quote:Without pointing any fingers, a mortgage adviser or a developer is hardly likely to have an unbiased opinion.Hmmmmm………..
A mortgage adviser and a developer are totally different beasts. A mortgage adviser does not care if property prices go up or down or interest rates move hence their advice is unbiased. They make money from settling loans and do not make anything from property like a developer does.
You need to understand what people do when various market conditions exist to understand why a mortgage adviser is independent of property sales. If the market is good, people buy property and a mortgage adviser will write many new loans. If the market is bad, people refinance and debt consolidate and the mortgage adviser will write many new loans.
Please explain where the bias is???
Robert Bou-Hamdan
Mortgage AdviserPMI is a more respected company and one of the mortgage insurers who dominate the market. Their opinion of median property prices influences me far more than an American report by a fund manager. If anything, they would talk prices down to reduce their risk of loss. They have not done this in my opinion.
http://media.corporate-ir.net/media_files/irol/63/63356/AUS_Property_Report_March2005.pdf
Please take note of TABLE 4 on page 4.
Robert Bou-Hamdan
Mortgage AdviserWithout knowing your personal information or your mother’s…
Your loan seems set so there is no issue. I assume you want the 20% deposit plus any fees. Looks like you want $100,000 from your mum’s property.
If your mum is eligible for a loan, she can just do a full doc application in her name and give you the $100,000. Same applies to a low doc application. There are loans out there that allow your mum to be self employed for one day to get the loan. A no doc loan may also be an option if there is enough equity in your mother’s property.
At the very least, there is no need to tie up the properties through cross-collateralising or putting each other on title. The situation you speak of is very common in the industry. I would suggest finding a new mortgage adviser – QUICKLY – as you only have 30 days.
It does not sound like a problem at all.
Robert Bou-Hamdan
Mortgage AdviserGroms, I don’t believe you are telling the solicitor the whole story.
Did you tell them that your girlfriend could not get finance at the lower amount?
Did you tell them that your associated costs will be much less than the $10,000 you are over-inflating the price by?
I think the funniest thing will be that when a valuation on the property is done and it comes in at $108,000 or less again, you will have lost a stack of money that you spent trying to rort the system.
You do realise that if you were trying to borrow more than 80% LVR against the property and attempt to do so again, they could find out the last valuation don’t you? There are only two mortgage insurers and they speak to each other and you might even end up with the same one.
Robert Bou-Hamdan
Mortgage AdviserJust a final point for this thread which I have pointed out previously:
Trends change with technological advances and changes in comsumer spending.
Enjoy your doom and gloom boys. I prefer to surround myself with confident people who think for themselves and not reproduce other people’s work over and over.
Robert Bou-Hamdan
Mortgage AdviserI am amazed at you guys. Anyway, I have spent more than enough time discussing an irrelevant US written article. It is a what if article which is not based on the Australian economy.
I wonder why you left out this bit Foundation?
“This point is more relevant now in the U.S. than it has been before because of the sudden recent rise towards 40% in the use of floating rates.”
Enjoy yourselves.
Robert Bou-Hamdan
Mortgage AdviserNo Richard. I have NEVER seen that happen!!!
Thank the lord I have made the decision to not actually write loans anymore. The closest I will come is providing advice and referring the business to local brokers.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by foundation:Stagflation is merely a situation where an economy slows and prices rise.Merely? Rising consumer prices but an economy that cannot sustain wage inflation while redundancies increase?[blink] Far from rosey IMO.
My use of ‘merely’ refers to the definition of the word, not the effect.
As I previously pointed out, the RBA has 3 choices – tighten their bias to combat inflation but risk tipping the economy into recession; loosen it to prevent stagnation thus compounding their past errors; or try to balance the two with stagflation the likely result.Stagflation is not a risk to the Australian economy in my opinion. It is a much more likely risk in the US.
Who is advocating a further 45% drop in property prices??? Certainly not me!I don’t recall stating that you did. I stated that I believe property prices will return to historic trends in relation to rents, household income and inflation. This will require 30-45% falls in real terms around the country, with some regional variation.
Actually, the wording was as follows…
Originally posted by foundation:In contrast to Rob’s belief that the market has ‘bottomed out’, I believe houses are still 30-45% overvalued throughout Australia, and will revert to historic trends in relation to rents, wages and inflation.
Cheers, F. [cowboy2]
If you believe that prices are overvalued by 30-45%, does that not mean you expect them to reduce by this amount if you expect some sort of “bubble burst”?
Anyway we will no doubt continue to disagree. Only time will tell*. Back on the topic of Renting vs Buying – I say renting is [specool] and [thumbsupanim].Economic opinion never has a right or wrong answer. That is why the field is so good. You can always find evidence to support every economic possibility. Regarding renting, if you want to buy and can afford to, now is a fantastic buyers market and there are some great deals out there.
Robert Bou-Hamdan
Mortgage AdviserThat is good to hear Felicity. Although I do not know his teachings, I have heard he has a very strong following which I doubt would exist if he took part in fraudulent activity.
Groms, if you are so keen to buy this property, why don’t you just go get a credit card for the shortfall? We are talking a maximum of $8,000. The higher interest is a small price to pay to avoid getting involved with fraud.
Robert Bou-Hamdan
Mortgage Adviserdmichie, that article does not support your claims. Why do you persist in posting it over and over and over again?
Robert Bou-Hamdan
Mortgage AdviserSurely you are not serious with this bank idea??? Bank returns are lame in comparison to what other investments are available.
I would also like to understand why a decline in building approvals would guide you to selling all your property in a flat market (where you wear the loss of equity over the last 18 months plus). A decline in building approvals potentially means a property shortage in coming years which would possibly result in under-supply, increased demand and higher prices. How could a negative return (after inflation, taxation and selling costs) by selling up and putting money in the bank be better than holding for the next cycle?
Robert Bou-Hamdan
Mortgage AdviserI apologise for the typo. You are correct at 3%.
So where is support for a decrease in property prices of 45% over the next 12 months?
I don’t see any evidence of doom and gloom or bubbles bursting.
Just regarding your comment about the March increase having ‘such a big impact’, can you please explain where this is evident?
Robert Bou-Hamdan
Mortgage AdviserYes. The lender may be concerned with you being provided with an over-inflated building contract in which you will receive a cash rebate from your relative. A simple solution to the problem would be to ask the lender if they will let your relative do the work if you can organise an independent fixed price quote for the work.
Robert Bou-Hamdan
Mortgage AdviserStagflation is merely a situation where an economy slows and prices rise. May I ask what evidence of this you have seen?
Who is advocating a further 45% drop in property prices??? Certainly not me!
The US is certainly heading for stagflation in my opinion.
Robert Bou-Hamdan
Mortgage AdviserI was of the understanding that stratum title gave freehold ownership of the unit but not the common areas which are held in a company name. Also, foreclosure is an American thing.
Robert Bou-Hamdan
Mortgage Adviser
