Tell her to be careful and to watch out for high interest rates and high charges. Most brokers would be able to set up something similar for free with possibly a lower interest rate. This sounds like it is a line of credit type loan, and the rates for these start at around 6.72% (thats after the 0.25% rise), depending on loan size.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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You should probably look a getting one property in your name, see how you go and then if you intend to keep going, set up a trust at that stage.

Trusts are cheap to setup. from $137!

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Just be careful, these are usually hard to finance and hard to sell and can have management problems.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Trusts cannot distribute losses. Even Hybrids can’t do this. Also none of the above expenses would be claimable against your own income. The trust would be able to claim them against its income. I don’t know about travelling costs though.

With a hyrbid, only the interest expenses would possibly be claimable against your peronal income.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

I have done two refinances. The first went through ok, with the lender and mortgage insurer treating it as a normal refinance. A few months later I tried again, with the same lender, but the mortgage insurer (PMI) had changed their opinion on wraps and would not treat it as a refinance. They would only lend based on contract – depsite around 2 years passing since they signed it and values having increase dramatically. In the end, i couldn’t get them finance. They ended up going to another broker who aparently did up a dummy contract at a higher amount that got them through.

This was about 2 years ago and things may have changed.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

A lot of people interstate even use Dale Gatherum Goss who is located in Melbourne. It is best to use someone who specialises in Hybrids as some accountants are not worth their money.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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$200 per year should do it, plus maybe extra per property, CGT etc. If you have a company, then annual ASIC fees etc about $350 extra. A Hybrid may be a bit more complicated, and hence cost more.

Good luck with it.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

I have used Goldmine (not sure of the version) and don’t really like it much. There are various filed you can add etc, but don’t know if it could do financial type reports.

We are now using a web based software called Symmetry which can be integrated with MS Outlook and can handle financial details of clients and borrowing capacities etc.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Hi Zen

I’m not sure I understand what you are saying.

With a hybrid trust, you borrow money to buy units in the trust. Since you are borrowing the interest will be able to be offset against your own income.

With a discretionary trust, the interest will be claimable by the trust only. The trust, or trustee, is borrowing to buy the property. If after expenses are deducted from the rental income, there is a loss. This loss must stay in the trust, and cannot be offset against personal income.

you said “borrow against a trust”. If the trust has an unencumbered asset, then it may be possible for you, the trustee, to borrow against this (if the trust lets you) and the interest for this loan could be offset against other personal income if the loan was used to buy an investment property.

If you are in the top tax bracket, then a trust may still be a good idea, for asset protection reasons, succession reasons and tax reasons.
eg. You could use a hybrid trust, offset the interest from your personal income and have the profits distributed to a company which you own and would only pay 30% tax – assuming you had no other beneficiaries.

Maybe you should check with another accountant just in case.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

I beleive being in the same industry is OK, but if you are on a probation period, then they won’t accept that. Either way it would be risky going uncondition in a situation like this.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]