Forum Replies Created
Terry, no offence intended but that plan is the most ridiculous thing I have ever heard!!!!!!!!
Two main issues arise…
1. What if the property prices do not “double” in value over the 7 years?
2. Never paying down any debt or not covering the interest expense results in negative equity each year and would prevent you buying the 7 properties required in your example. How do you get around this?
And another problem…
What happens when you retire and no longer qualify for loans and all your equity is used up so you cannot take advantage of a reverse mortgage and property prices have slumped resulting in losses if you sell in the current market?
Robert Bou-Hamdan
Mortgage AdviserTry this link…
http://www.mortgagepackaging.com.au/index_files/hot_links.htm
Look under the RESEARCH heading and you will find the information you are looking for by following the various links provided.
Robert Bou-Hamdan
Mortgage AdviserI think you answered your own question when you said you are happy renting. Buying an investment property might be the way to go.
Regarding the FHOG and stamp duty benefits, these may be stopped at any time so no-one knows for sure if they will be there later. You could always buy an investment property and live in it for 6 months and then go back and rent again.
Robert Bou-Hamdan
Mortgage AdviserJust on Caroline Byrne, did you know the chauffeur found her body at the bottom of the gap? Who goes looking at the bottom of the gap for a missing partner????
Also, has anyone made the link between the suspicious fire and the Qantas share issue? Guess who Trevor Kennedy worked for!
Robert Bou-Hamdan
Mortgage AdviserTerry,
Hart’s case was not about a specific product or situation. It related to capitalising interest on investments to reduce non-deductible debt (amongst other matters). This was deemed to be illegal. The whole point was to stop people claim more back in tax than they were legally entitled to.
The distinction must be made that capitalising interest is not illegal in itself. It is only when you try and claim a deduction for the interest on the interest that was capitalised. In other words, there is no benefit capitalising interest any longer unless you can not afford to pay it when due.
<Edited – Link not functioning>
Robert Bou-Hamdan
Mortgage AdviserTerry, MSE is actually 6.75% over 300k.
Robert Bou-Hamdan
Mortgage AdviserSorry Terry, I am not one who likes to provide the name of a lender in a public forum on a regular basis. All this does is take business away from mortgage brokers as readers think they can do it all themselves but then come back to the broker when things go bad and expect them to clean up the mess.
Robert Bou-Hamdan
Mortgage AdviserJust on the topic of lenders’ opinions of CBD apartments, it is a very good guide to investors. Lenders began reducing the LVR on apartments back in 2003 and look what has happened since then. They spend millions of dollars a year on research to protect their loan books so it might follow that they know more than your average every day investor.
Why try and buy something that everything is telling you not to?
Robert Bou-Hamdan
Mortgage AdviserI would love to see him get a loan at age 15.
Robert Bou-Hamdan
Mortgage AdviserI think I should clarify my comment about thinking poorly of the guy in life as it seems people do not realise what Rivkin actually did through his life. He was eventually convicted on a small matter like Al Capone was convicted of tax evasion instead of the many more serious crimes he committed. This does not mean he made only the one mistake.
In my opinion, and that of many others, Rivkin had been manipulating the stock market for years. Regarding fleecing Australians, this was done by telling his newsletter subscribers to buy when he was selling and vice versa. Granted, most of them made money on many of the trades but many people also lost a stack of money on a lot of trades. He was eventually forced to place footnotes in his newsletter outlining his positions regarding shares he was discussing. I don’t think this prevented his ability to manipulate prices as there was a few days delay between his newsletter going out and the market prices changing.
Then there was the incident of the suspicious fire in a building that was over-insured on which he made millions of dollars. I believe this matter is still being investigated.
Anyone can make money when they operate unethically or outside the law and I cannot respect anyone who does it this way.
That being said, I still feel sorry for his family who will have to deal with all the rubbish that will be in the media in coming months.
Robert Bou-Hamdan
Mortgage AdviserHi Scott,
It is good to be back.
Regarding Derivex, I have psoted before but the information keeps getting deleted as people get very heated when discussing this topic.
As far as I know, there is not much happening and it seems that Derivex is waiting for the outcome of the ASIC investigation before continuing. As I am no longer involved, I really do not know what they are doing.
Sorry I could not be of more assistance.
Robert Bou-Hamdan
Mortgage AdviserEstate planning is not one of my strong points as I do not have kids. I merely have everything insured so no debt is left if I die and there is a chunk of money left over as well as all unencumbered assets. Everything I own just goes to my de facto until I need to make a more specific will. I was under the impression this is also supported by legislation. This may be naive but I expect to live FOREVER!!!
Robert Bou-Hamdan
Mortgage AdviserJust regarding saving up for a new deposit, or anything else, when you have non-deductible debt like your home mortgage, you would be better served putting all the money into the loan if it has redraw or an offset account and the loan is interest only. This not only lets you save money but also reduces how much you are paying out in interest repayments and you still have full access to the funds as well as more flexibility when you move plus greater tax advantages.
A comparison of why not to have seperate savings when you have non-deductible debt is below…
Seperate Savings
$10,000 Savings
$100,000 Loan Amount
7% Interest Rate
$7,000 Annual Interest Only CostInterest is calculated on the $100,000 outstanding.
Savings Combined In Loan
$10,000 Offset Account Or Redraw
$100,000 Loan Amount
7% Interest Rate
$6,300 Annual Interest Only CostInterest is calculated on the $90,000 outstanding.
The above example just shows how simple structuring changes can save you a lot of money. As you can see, combining the savings will provide you with an additional $700 in savings.
Structuring the loan as interest only also does not prevent you from making extra payments without penalty. It is also advised that you make at least the equivalent of half the monthly principal and interest payment each fortnight to make even greater savings and huge reductions in the loan term.
I should also point out that if your savings were in a savings account earning you 6%, you would have to pay tax on this. If you put it in the offset account or redraw, it would save you 7% which is not taxed because it is not an income. If your tax rate was 50% (as an example), the 7% saving would equate to a 14% annual return on your savings.
Robert Bou-Hamdan
Mortgage AdviserI think it is a disgrace that the TV news is reporting the death as “Disgraced stockbroker Rene Rivkin found dead”. As much as I thought poorly of the guy in life, he has died and should be shown the respect that anyone else should also be provided with. His family are the only ones who will be hurt by the media comments and they have done nothing wrong to deserve it.
Robert Bou-Hamdan
Mortgage AdviserThere are numerous links to various sites that may help you at the following website…
http://www.mortgagepackaging.com.au/index_files/hot_links.htm
It is often updated so check back every now and then.
Robert Bou-Hamdan
Mortgage AdviserSpidey, you are right about needing more information but it is difficult to keep asking for the information that is required. If this is done, it would take a week of posting ping pong before a complete answer can be provided.
This is why many of my posts are qualified or are provided as examples of specific scenarios and often end with “speak to a mortgage adviser” (or other professional. There is a process to go through to get the information required to provide an accurate response when it comes to finance.
The comments I do provide are not based on any conclusions but rather assumptions about the person’s situation. Often, those assumptions are correct and no further correspondence is required to help that person. If those assumptions are wrong, the person seeking information usually lets you know and you adjust your comments appropriately.
We are all just trying to learn or help each other here the best way that we can.
Robert Bou-Hamdan
Mortgage AdviserI am interested to know…
Why do you have to pay strate fees when you are buying a block of land?
Why do you have seperate savings when you have a non-deductible mortgage?
Why is your variable loan more expensive than your fixed loan?
Assuming you can service all debts, I would build the house asap. That way you will have another income much sooner to help pay off the loans. You should not be too worried about having enough equity if you are using a contractor with a fixed priced building contract to build your new home as lenders will lend against completion value.
Robert Bou-Hamdan
Mortgage AdviserI have not read the newsletter but it sounds like it means that Steve does not favour redrawing funds from equity held in properties to fund your lifestyle. If this is what he meant, I agree.
Robert Bou-Hamdan
Mortgage AdviserIt has nothing to do with volume and price. The margin lenders assess the actual companies and assign a risk-weighting to them. These often change.
You will find that most available shares are blue-chips or large organisations. Have a look at Commonwealth Securities for a good explanation with examples…
http://www.comsec.com.au/PublicAccess/default.asp?Page=MLD
A list of their acceptable shares can be viewed by running your mouse over ‘Accepted Security’ and then clicking ‘Accepted Shares’.
Robert Bou-Hamdan
Mortgage AdviserLike I said in another post, most of the information contained in those packs is freely available to those who go looking. That is way too much money!
Robert Bou-Hamdan
Mortgage Adviser
