Forum Replies Created
Just regarding the ANZ LOC, it also costs $150 per annum when a standard loan with an Offset Account costs nothing.
Robert Bou-Hamdan
Mortgage AdviserWhy does it have to be a LOC?
Robert Bou-Hamdan
Mortgage AdviserIf the Brisbane market is anything like the Sunshine Coast, I would be running for cover. I had 3 seperate clients all who bought units in low rise developments which came in at 5-10% below purchase price and they bought 2 years ago also.
Robert Bou-Hamdan
Mortgage AdviserFantastic Nat!!!
Dinner????
My shout!!!!
Robert Bou-Hamdan
Mortgage AdviserBut it is 7.55% instead of 6.76% and NOT a LOC as was being advised to be taken by many on here. The LOC would cost more.
If I told my clients the rate I got them was “commercially acceptable” when I could have got them one 0.79% cheaper from day one, I would not have any clients left and would lose in court when sued by them.
Each to their own I guess.
Robert Bou-Hamdan
Mortgage AdviserNat, I don’t believe I threw my credibility down the drain at all. I believe my credibility is impeccable!
I risked my business and a lot of time, money and effort (as did many others) to check out a new product offering so my clients could potentially benefit and would not incur any costs or losses by having to check things themselves (especially if things went bad). I can’t think of anything more cautious than putting myself forward instead of my clients. Different people have different risk profiles and I guess mine is just higher than yours. I mostly enjoyed the experience.
What I didn’t do was sit on my backside criticising something I never looked into properly because I believed (but did not know) it was not possible. There is no way you can say you checked this product out properly because you have never had access to the internal structures behind the offering. I can also say that some of the lenders still have teams of staff working on creating a similar structure. I don’t think they would be doing this if they “know” it won’t work as you say you do.
Sorry to burst your bubble Nat, but the interest free product is a real possibility. I have no real issue with the product itself. The problem faced is a management issue. As others who participated in checking this company out can verify, I spent considerable hours crunching numbers every way possible to ensure this could work when I worked there.
I am more than satisfied that the structure is profitable. My only concern was with one part of the structure that would attract the large investors which I never had the opportunity to look into. If this part is solid, I have no problem with the structure at all. If it is not real, the structure can still be profitable but not at levels that would attract the funding required.
Can we get past this now and wait until the company starts or collapses and then discuss it further then please?
Robert Bou-Hamdan
Mortgage Adviserbrahms, how exactly does a lender demonstrate serviceability for the “total maximum term of the loan”?
In all the full doc 30 year loans I have ever done, I have only ever asked for two current payslips and a payment summary and the loans get approved. I have never asked for a 30 year plan and have never been asked by the lender for the applicant’s intentions over the term of the loan.
I have only demonstrated serviceability as of the day of application (and just prior to settlement in some cases where the loan has dragged on following a pre-approval).
Robert Bou-Hamdan
Mortgage AdviserThank you for your valuable and intelligent input Nat.
One thing… who told you that I think the product does not work?
Robert Bou-Hamdan
Mortgage AdviserBrahms, the rate also goes up as outlined above and reduces back to the MMS rate in the fourth year.
Robert Bou-Hamdan
Mortgage AdviserIf the company does not have sufficient history to borrow, it is always necessary. When a company can show at least two years of profits sufficient to service a debt, the guarantee may not be required.
Robert Bou-Hamdan
Mortgage AdviserJust because interest is not charged to one party to a complicated transaction does not mean interest is not charged or earned in the process. I think you will find that your wheelbarrow is safe and the money would be taken instead.
Robert Bou-Hamdan
Mortgage AdviserMy example involves no gearing and is a return of 24% gross per annum. There is a lot of great investments available in the market if you look around.
I also consider this investment to be relatively low risk.
Robert Bou-Hamdan
Mortgage AdviserTerry, that is exactly what was stated is illegal in Hart’s case.
Robert Bou-Hamdan
Mortgage AdviserMMS is a standard loan so your client would be declined for applying for this as a low doc loan application. As a full doc, the rate is 6.80% which is higher than the loan I have in mind anyway. The equivalent Macquarie low doc loan would be 7.55% for the first year and 6.80% by the fourth year which is still higher. If your client wanted a LOC, it would be even more.
Robert Bou-Hamdan
Mortgage AdviserI would love to see that case.
Apart from capitalising interest being non-deductible in my opinion, I can not see any benefit to doing this if there is no non-deductible debt to pay off (and then the capitalising interest is definately non-deductible).
Why would anyone want to pay $1.00 today to get back $0.47 (or $0.30 if a company) tomorrow. It is not intelligent. I would rather pay $0.47 tomorrow and keep $1.00 today by NOT capitalising the interest which I can compound over the accounting period and make even more money from before having to pay the tax.
In my opinion, anyone who invests or creates structures just for tax deductions is poorly advised.
Robert Bou-Hamdan
Mortgage AdviserThere is not many lenders who do what ANZ do. You cannot put every client into ANZ.
What if it is a $100,000 Low Doc loan at 80% LVR? Where would you get the LOC and at what rate (no intro)?
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by maximus:I’m trying to get equity through lines of credit against my I/P’s to use for deposits as well as service the loans into the future.
I don’t know why you are looking for a LOC but what concerns me more is your comment above. If you need a loan so you can service other loans, I would be advising you not to borrow any more money. You will be destined for disaster especially if tenants move out which is very common in the current property market in many parts of Australia.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by Nat R:There is also a variation where the interest is capitialised for 25 years to create a larger principal amount, which is then paid off in equal payments….the increased payements are then considered to be all principal.
No such variation exists because no interest is allowed to be charged or it would not be a Muslim (Shariah) loan. Calling interest ‘principal’ does not make it principal.
As we have seen there is no way a true interest free home loan is possible…I think the phrase ASIC like to use is “Pie in the Sky”True interest free home loans have been around since the dawn of time. The Muslims share equity and this is a true interest free home loan because there is no interest charges.
Regarding your implication that the unmentionable topic cannot exist, let me assure you that it is profitable to structure an interest free loan without sharing in the equity. The scepticism you show towards this product should be management related rather than directed at the product. The level of return is the only questionable issue that needs addressing in my mind because funds cannot be raised if returns are not sufficient. This does not mean a philanthropist could not offer these loans and still make a profit.
Robert Bou-Hamdan
Mortgage AdviserKerri, interesting stuff. I have been working on the same thing since January. I am awaiting some industry affiliations before making it public. Maybe we should merge them.
By the way, brokerunity.com.au is long gone.
Robert Bou-Hamdan
Mortgage AdviserFirstly, on those figures, you could only get $20,000 if the house is worth $270,000 unless you feel like throwing a few thousand away for mortgage insurance.
Secondly, you should use a split if the funds will be for an investment purpose. An offset account is fantastic to have against your family home debt. You can set the loan up and deposit the money straight back into the loan and redraw it when you need it so as not to mix up the non-deductible and deductible debt.
Thirdly, why organise a new loan if you are selling the place?
Fourthly, have you considered using bridging finance if you are selling one place to get into another?
Finally, use a broker or you could make some silly mistakes.
Robert Bou-Hamdan
Mortgage Adviser
