I agree with Regina, it is a great problem to have.

I would be incloned to keep this property as it and borrow against it for income producing property which you could then redirect into that personal loan. Do you have a loan on your PPOR?

When you decide to retire (could be very soon!), you could sell this proeprty and then pay off some of the debt on your positive cashlfow properties and have a great passive income comming in.

Terryw
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KuRCE

Land tax is levied on investment propertis (if you reach the threshold), but they only charge you on the value on the land component, nit the buildings or other improvements.

Terryw
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There is not much to lease options. The contracts are just a lease wtih a separate contract for the option. You can have the option strike price decrease just like a PI loan over 30 years if you wish. In that sense, it will be almost the same as a wrap.

Terryw
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Hi

I am a mortgage broker in Sydney and we have a private financier who funds these sorts of deals. He will basically lend on 70% of the end value, subject to the location of the property etc.

If the values come in at $250,000 each, the 70% of this is $525,000. This should be enough to cover the construction costs, and there is meat in there for any extras that may pop up and it may even be possible to capitalise the interest until it is complete.

Rates are high, but not may questions are asked!

AS she has no income, this would not get through a normal lender.

Can you tell me the lcoation? (maybe offlist?).

Terryw
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You may want to consider some life insurance and some sort of trauma insurance incase you get incapacitated and can’t work-especially if you are negatively geared.

Terryw
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It is also best to keep loans separate for tax purposes. And it easier to refiannce just one of them in future (if necessary).

Terryw
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You will nearly always have to pass the mortgage insurance criteria if you are borrowing more than 80% of the value. A few exeptions are if you go through a non conforming lender such as Liberty or bluestone (but higher rates).

If pass the banks requirements, then maybe you could borrow the 20% from elsewhere intiailly. wait 6 months and then increase your loan to pay off your loan for the deposit?

Terryw
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Using a trust allows you to distribute any income at your (or the trustee) discretion to any beneficiary of the trust. If you buy in your name only, you are stuck with all the income. Beneficiaries are usually listed vaguely such as any current, future or past spouse, any children or future children, step children and grandchildren. So you may have potential beneficiaries that aren’t even born yet! You never know how your circumstances will change.

eg. Say you were working and your spouse wasn’t. If you had $6000 in positive rental income, you could simply distribute all of this to your spouse and no tax would be payable.

Another major benefit is asset protection. Holding assets in Trust means they are not really yours, so if you are sued, those assets are protected (to a certain degree).

Terryw
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There are generally more deductions available to a company or a business than an individual.

For some unusual ones (eg alcohol) see
http://www.gatherumgoss.com/business.htm

Terryw
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Bruce Whitting.
http://www.mintgroup.com.au/about/profiles.htm

Terryw
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