[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 25, 2004 - 1:56 am

Simon I think you may have misread the question.

If you have an interest only loan for $200,000 and then repay $100,000 then the repayments will be based on $100,000. Therefore, if the interest rate was 6% then the repayments would be $500 p/mth. If you redraw $50,000 and balance is up to $150,000 then repayments would increase to $750 p/mth. An interest only loan with redraw is like a line of credit.

If the loan is principal and interest then the dollar amount of repayments is set on the original loan amount and does not vary based on outstanding balance.

I hope that makes sense.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 18, 2004 - 6:46 am

I think Mortgage House said they were cool with Wraps but this might have changed.

Steve’s “need finance?” section says they can help with Wraps doesn’t it? Contact them.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 18, 2004 - 6:42 am

St George No Depsoit loan will do 100% (up to $600k) with no genuine savings.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 17, 2004 - 2:50 am

Just ask him the question – i.e. what does he plan to do? What will he do when he retires? Who knows, he may be entitled to a good pension which will allow him to continue making the repayments.

Most lenders would look at the applicants asset base. If its stong then age is less important.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 17, 2004 - 2:46 am

St George and Citibank will consider doing 70%. That’s about as high as you can get.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 9, 2004 - 8:04 am

Yes, there are many things you can do in terms of increasing your borrowings but you should always ensure you can afford the debt.

The road to riches is not a short one for 99.9% of people. It takes years. If you choose to take high risks in an aim for getting rich quicker then be prepared to suffer the consequences.

Anyone educated and licensed would not provide this sort of advice. Unfortunately, its the less educated people that suggest stupid things. DON’T TAKE FINANCIAL ADVICE FROM A MORTGAGE BROKER.

If you read any books but successful (rich) people none of them take wild risks. They all take educated risks and only do things that make sense to them.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 9, 2004 - 2:21 am

But who’s going to give you the line of credit in the first place? You still need to prove serviceability?

This strategy is very risky and stupid. What qualifications did he have? Did he even know what he was talking about?

Yes, Simon was correct. The interest expense on the new line of credit debt what not be tax deductible.

I put this advice in the same basket as someone suggesting to rob a bank.

Who was this person? They should be reported to ASIC and other forum members should be made aware.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

August 6, 2004 - 2:04 am

That may be true but you have to weigh up the pros and cons of the estate and tax planning benefits trusts offer. In my opinion, the trust (with corporate trustee) wins. Good luck.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 22, 2004 - 3:21 am

It’s hard to say.

The interest rate environment and government money market management policies have changed since the late 80’s and early 90’s. I beleive the government (RBA) is better at managing the interest rate market.

I’m not sure why you assume we’ll be in an upward trend. Nothing suggests we are going anywhere at the moment. But who knows? I think you can over-think interest rates. A very knowledgeable and high profile economist once told me to forget forecasting exchange rates and interest rates – no one knows.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 21, 2004 - 11:54 pm

Here is the media release I did: http://www.prosolution.com.au/articles/fixed.pdf

Assuming you can get an interest rate = standard variable less 0.50% (and everyone can by using a basic variable) then there is no time when any fixed rate borrower was better off (over the past 10 years).

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 21, 2004 - 7:42 am

We did a study – no fixed rate borrower has been better off in the last 10 years (compared 3 and 5 year rates to variable over the last 10 years). The longer the terms the more the fixed rate borrower ended up paying.

The rate may look good but it is very likely that you will be worse off.

What happens if the property appreciates in value and you want to access equity? What happens if you want to do anything?

I have seen more clients lament choosing a fixed rate rather than being happy.

In my opinion, it sounds like a terrible idea.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 21, 2004 - 7:31 am

Is it too much to suggest getting rid of one of the kids??? You’ll still have one. Just keep the favourite. I’m sure they’ll understand. [biggrin][blink]

(can you tell that I don’t have kids yet?)

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 17, 2004 - 1:31 am

The bank will order the valuation themselves and they will choose a valuer from their panel. You will have no say in the process.

However, if you feel the value is too low then you can ask the bank to discuss this with the valuer. You will have to provide strong evidence (i.e. recent sales of comparable houses) to support your estimate of value. It is possible that the valuer may not be aware of all past sales (possible but unlikely).

By the way, a real estates opinion is not good evidence. It needs to be completed sales of comparable properties in your area.

In some situations brokers order valuations on behalf of the lenders (ANZ) and therefore we have more access to the valuer.

Hope that helps.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 16, 2004 - 6:15 am

Actually Aceyducey it is very unclear if a bank has a duty of care to the borrower. There is a lot of evidence that they don’t. Hence, they can sell less than fair market value. Let’s not forget – they are a motivated seller!

Kay – I have tapped your house and wired your brain. I know everything you do and think about. Luck for you that I don’t article articles about all your thoughts!

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 15, 2004 - 11:40 pm

Mel

The law stipulates that there are three prerequisites that must be fulfilled before the lender is allowed to take possession and sell your property.

1. There must be a default (either through non-repayment of principal or interest or not fulfilling another provision contained in the mortgage contract);

2. A notice must be served to the mortgagor requesting the default to be remedied (e.g. repayment of overdue amounts). The mortgage documents will set out how the notice is to be served; and

3. The default must continue (without remedy) for a period of 30 days or one calendar month from the service of the notice.

However, in reality, lenders will work with a borrower for many months before they decide to sell your property.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 15, 2004 - 7:21 am

I have just written an article about this. Due for release in the Sept issue of API. It’s about debt mgt, what to do before you borrow and what happens if things go wrong.

From my research people have plenty of opportunity to manage their finances once they get into trouble to avoid the situation where the bank forces them to sell. The whole process normally take 4 – 6 months before the bank says “sell now!”.

Just to be a bit of a loan nerd… foreclosing is where the bank transfers the ownership of the property into their name and the holds onto it. This rarely happens. Normally they just take possession and appoint a local real estate agent to sell the property.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 13, 2004 - 7:07 am

This would be very difficult.

1.LVR too high.
2. You don’t have any equity in the property (until it’s built).
3. Exit strategy? How will Mezz lender get their money back? They are a short term lender only so you either need to refinance (pre-approval) or sell the property (pre-sell?).
4. Loan is very small and there not much money to be made for a Mezz lender. Not attractive.
5. 20% profit ($70k) is bear minimum. To be honest it’s a bit tight.

I think you are better off finding a joint venture partner.

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 13, 2004 - 6:18 am

Mezzanine is noramlly used in addition to normal “prime” finance through a 2nd mortgage (or similar). It is really used instead (or in addition to) equity.

So what is your LVR? Or is this a general question?

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 13, 2004 - 6:15 am

. Can a broker speed up the loan process? Yes, but so can bank staff.
. Can a broker get me a bigger loan size? No, bank staff and brokers use the same guidelines. However, brokers can use a combination of lenders to extend your capacity.
. Can a broker negotiate a better “deal” for a loan? I mean here things like reduced application and other fees. Maybe, but this depends on your loan size.

Generally, you should not be disadvantaged by using a GOOD broker (there is up side and no downside).

Cheers

Stu

[Stuart WemyssMember@stuart-wemyssJoin Date: 2003Post Count: 598]

July 13, 2004 - 6:11 am

Yep, agreed.

http://www.fpa.asn.au/
http://www.cpaaustralia.com.au/
http://www.icaa.org.au/

Cheers

Stu