Hi Grant

yes good point, they just Card B would just make a payment into Card A, regardless of the balance outstanding. So you wait for this to happen, and then make the withdrawal.

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Hi Grant

Why are you paying above market value for this property?

I would be inclined to suggest you not buy it – mainly for the reasons above.

But you also have to consider the opportunity cost. If you keep this one, it may mean you miss out on others – possibly more profitable sub divisions etc.

You will also have this hanging over your head for 2 more years. Worrying if it has dropped or not, worrying if you will be able to get a loan or not.

Things change, and the Low Docs or mortgae insurers may put out a policy restricting loans for these sorts of properties in that area.

I am not a fan of off the plan as this all happened to me. I signed up, the market crashed, and I worried about it for 2 years, and only was able to get out because of the contract sunset clause.

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Hi

What is short selling?

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Why doesn’t she move out of hte retirement place back into the home for a short period, and then move back again? The 2 years should start again.

Give Centrelink a call and talk to their financial advisors there.

Also seek out a professional knowledgeable in this area.

I don’t think selling the house now will solve the problem as she will then have $1.5mil which will take her over the limit. Gifting money will not help as the rules only allow gifting a certain amount each year – anything over this is still assessed as being in her hands.

And, at the end of the day, how much is the pension worth? Maybe $10,000 pa?? Maybe it is not worth worrying about trying to qualify. She can always get a reverse mortgage to cover any income shortfalls. Hopefully the growth of the property will be faster than she can spend it.

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You just need to refine the strategy a bit. Get 2 credit cards.
Get a cash withdrawal from card A for $10,000. Transfer the balance of this card to card B – chose one with a 6 month interest free period for balance transfers. Now you have $10,000 interest free for 6 months. You may have to pay a few days interest on card A before the transfer kicks in.

The $10,000 can then be deposited in your 100% offset account secuared against your home loan.

But, in 6 months you may only be saving $350 in interest! ($10,000 x 7%pa). Is it worth it? You must also take into account the fees on the credit cards.

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You couldn’t apply here without it causing a problem. I don’t know about getting loans in NZ, it may still show up there. They best thing to do would be to get a copy of your CRAA file from Baycorp in NZ – and see what is on it.

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A lot of people complain about their accoutnants not telling them things such as how to save tax, how to structure etc. I have experienced this myself in the past. I have come across some information asked the accountant and he said, yeah that would be possible, and I have thought why the hell didn’t you tell me this before, I could have saved xxxx$ in tax!

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I don’t know much either, but I would think if they have signed contracts and exchanged, nad have been making payments, then they have an equitable interest in the property. If they were to go bankrupt, a bankruptcy trustee would step into their shoes. The trustee would act for the benefit of the person’s creditors and they would act as if they were the bankrupt.

In this case, it may depend on how much equity is in the property. They would probably arrange for the property to be sold, and the equity, if any, to be distributed to creditors.

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Thats a good rental yield for a Sydney property.

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Hi DraconisV

Usually with Io loans you can make extra repayments without penalty and these extra repayments can often be withdrawn again later (maybe with fees).

A possibly better solution would be to use a IO loan with a 100% offset account. There can be tax probelms if you pay down a loan and then redraw money. having an offset account works hte same way, but avoids the problems.

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