Don’t need to go that far regarding ruling … doubt the company would spend that time and money for that purpose anyway.

To know if it’s a true Offset account or not…just need to find out if it as 2 dual account + if the “loan” increase when funds are pulled out from it…if the loan amount changes then it’s not a true offset- as the interest paid are mixed up.

A true offset account will HAVE 2 account seperated…they should no affect each anther another then lowering the interest
What we in the accounting world call a “dual account”

http://law.ato.gov.au/atolaw/view.htm?locid='TXR/TR936/NAT/ATO

( need to copy and paste the whole link)

6. The customer operates two accounts – a loan account and a deposit account. To be acceptable, it is essential that there be no entitlement, either in law or in equity, to receive interest payments or payments in the nature of interest on the amounts credited to the deposit account. The only benefit arising in the deposit account should be the right of the customer to ensure that the interest payable on the loan account is reduced in the way described in paragraph 7.

7. The reduction in the loan account interest referred to in paragraph 6 should be achieved by offsetting the balances of the two accounts. That is, the interest payable on the loan account should be calculated by dividing the outstanding loan principal into two components. A reduced rate of interest (often the lending rate less the ordinary deposit account rate) is charged on an amount equal to the balance of the deposit account. The reduced interest rate can never be a negative, ie. the deposit rate used cannot exceed the loan rate used. In those cases where the deposit rate would exceed the loan rate the deposit rate actually used in the calculation must be limited to the loan rate (see Example 3, paragraphs 31 and 32). The usual lending rate of interest on loans of this type is charged on the remainder of the loan principal.

8. If an account is made up of a series of sub-accounts, some of which are used for deposits and some for loans, then the sub-accounts will be treated, for the purposes of this Ruling, as separate accounts. Consequently, a loan offset account arrangement involving such accounts will fall for consideration under the principles applying to dual accounts (paragraphs 6 and 7).

Will need to ask a valuer that question.

Bank valuers are a werid mob-in some places/location granny made no difference 0.o – i think it was in TAS ( 7120?? something like that) the valuer declared granny was not in demand in the area + made no diff in market price.
And then you get the common areas like Liverpool, Blacktown and Granville NSW….Epping in VIC etc where the valuer would push the value up slightly

But the point is, you can request for the valuer and bank to add in “potential” value of a granny to the property.
If you want to know how much, you could go on RP data, price finder or Domai.com.au ( past sales) and do some price search on simliar houses with granny

Regards
Michael

Whats ur Current LVR??

TO be honest 3 month is not enough time for a house to gain enough in equity…Regarding the granny flat valuation, no the bank/valuer will not just ADD the construction cost on top; remember your applying for a equity release not a construction loan ( loan amount is to small for construction loan) …However some banks ( Normally the credit union and smaller banks) if your LVR is under 85% will allow the valuer to take “in consideration” that you will have a granny flat and compare it’s “selling” price to the market ie Another house in the same suburb with granny.

So it will depend on your LVR and which Bank.

Regards
Michael

Does the guy have a ABN?? and is he registered etc..

If so you can complain to the office of fair trading…if not- then that’s the risk you take with private/Gumtree cheap sales
Nobody has the “authority” to do anything.. unless you sue…but given the amount it’s not worth it.

Regards
Michael

As kong mentioned…Location and rental-

What you have provided + the pictures you have shown it could be ANY house…$7,000- $2M+

Regards
Michael

Hi,

I remember your own post ( regarding the Business and CBA); so i would say avoid paying down your PPOR ” directly” But instead add the extra surplus fund into your MISA account ( Cba’s offset account).

That way:
1. Interest is still less for your PPOR
2. Emergency funds that YOU can control – owing a small business is NOT easy and anything could happen…get sued?etc — CASH IS KING
3. Buffer

Regarding passive income- what you have mentioned are the common ways of achieving passive income…wont be easy i have to say…
But as DC mentioned, having 50k passive is all good, but it depends on the holding cost as well.

Like any investment it comes with it’s initial outlay and risk. Being so young you have one important weapon in the investing world and that is “time”….you have time to ride out any negative changes in any market.

So i would say GIVE your investment some time and use “time” to your advantage…your not going to jump from 10k passive to 50k passive with no outlay + low risk within 12 month- applies to shares and property.

When i was still in H/S, i paper traded property and shares on a weekly basis- keeping track of all my ” virtual” investments did this for a good 3 years- i had time and NO money at that time lol

Once i got my first full time job and save up my first deposit – Boom! bought my first place within 9 month of starting my job over a period of 7 years bought a few more IP and shares. Was a long journey but till this date in time i still haven’t sold ANY of my investments as im giving it time to grow further + if i sold all my investment as of today and paid out all my debt i would have excess of $1.3M in cash ( after all CGT paid etc..) and im also only 27 + still living at home like a true Asian

Moral of my life story.
Give your investment some time + i personally believe capital growth is more important then cash flow in term of wealth creation.

Regards
Michael

Applies to ALL Australian resident buying IN NSW and declaring as PPOR.
As long as you have not bought any any property in Aus.

Regards
Michael

In WA, VIC and to some extent QLD i have seen seen a lot of full valuation ( valuation that are based on last 3 month sales figures) falling short and some even lower then purchase price from 1-2 years ago.

Regards
Michael

That’s the way i would look at it as well, given you have such a low deposit …the gov grant would help you boost your deposit + use less of your own cash ( discount stamp duty etc…) ; if you decide to buy IP first you won’t have enough deposit to buy a 2nd place either way.

One common mistake new investors make is to buy ANYTHING they can afford ( ie CHEAP!) as long as the rent is good…this can be a good strategy, but i would personally avoid this as your first property…why?

These sort of first time buyers who buy ” cheap properties” , buy irrationally and just look at the numbers. Their thinking is ” wow it’s cheap, i don’t want to live there, because it’s too far from work and everything else or the neighbourhood isn’t as good…but the rent is good” ….. next thing you know the place is empty for 2 month and nobody wants to live there…

So if the first place you buy is your PPOR and your ok to live there, the chances that someone else is ok to “rent” that same place is very likely and it may turn out to be a good buy after all.

P.s Not saying buying cheap property in rural location with high rent is bad…just be careful, especially if your inexperienced.

Regards
Michael

I agree with Jamie, LMI can be beneficial…especially if it means you can get into the market quicker….for you to save up 20% + stamp duty ( don’t forgot stamp duty and another soft cost….this can add up to $20k+) will take a while and by that time the prices of property may have gone up further or stay the same- who knows…

Generally speaking NO LMI at 80% LVR, but there are selected lenders that will do NO lMI at 85% and discounted up to 95.

Regards
Michael.