Well here goes – Hello all, I need lots of advice.
I am very new to all this so please excuse any ignorance I display.
I have come across a property that on the surface appears (or has potential)to be a great +cf ip. I have found an investing partner as I am unable to finace it all myself. The property is in a fantastic location – it is run as a B&B and there is a real lack of accomodation in this area. Some of my questions that I require a bit of assistance with are:
1. Is it classed as a commercial property
2. Is it best to go through a broker for a loan, if so what are approx costs,
3. What type of loan should I look at IO, I&P or what about the interest free ( sounds too good to be true) and
4. what is a low doc loan
5. Are there any licencing fees associated with B&Bs, if so what are they.
I think that is all for now, any assistance will be greatly appreciated, oh and the property is in NSW.Cheers Megan[blush2]
Hi Megan
Just to answer a few of your questions:
1) The property will be classed as commercial unless you live in it, in which case you will be able to get an owner-occupied loan.
2) Most brokers won’t charge you for the work they provide as they are paid commissions by the lenders. A good broker will save you lots of time and hassle and may be able to find you a better deal than you can find yourself, but then again I am biased
.3) The type of loan you should look at depends largely on your plans for the future. An interest only loan will enable you to increase your cash flow, thus potentially enabling you to place cash in other investments whereas paying off the principal will allow you to gain greater equity in your property, which can be used for other investments. A lot will depend on whether you are looking for a long term investment or simply wanting to hold on to the property for a short to medium period of time.
4) A low doc loan is a loan product that requires minimal documentation. It is suitable for self-employed people, or those who for one reason or another are unable or unwilling to provide proof of income or financials.
5) As I’m from Melbourne, I’ll leave it to someone else to talk about B&B licensing fees in NSW.
I hope this is some help to you.
Mortgageman
If you haven’t done so already the Bed & Nreakfast and Farmstay Assoc might be a good starting point
Thank-you for your information mortgageman – another Q. on brokers, if you decide that you are not happy with the service that the broker is providing or you decline the deal that they have found, are there penalties.
Also can any-one recommend a good broker.
To crj, I have not yet looked at the website you suggested but I will, thank-you.
Megan[biggrin]
Hi Meegan,
There should be no penalties for not taking up a loan offerred by a broker, as you do not have to pay them yourself.
There are plenty of brokers on this site that seem to know what they are on about, why don’t you try one of them. They won’t keep giving us all free info if they don’t get any business out of us.
Regards
Alistairmeganalex,
welcome!
Mortgage brokers usually have more than one or four lenders available to them. So while you could spend a lot of time chasing different banks for info while trying NOT to apply until you find THAT deal, they can shoot of info to all the lenders they are accredited with and then provide you with the best options.Repeat business is always a good insentive for them to treat you well, but having said that, there may well be some that really suck you into some thing.
I haven’t had that displeasure as yet.If you go for something like a I/O loan with lumpsum repayment options, you might find it the best of both worlds – good cashflow and principle reduction. My opinion only.
Cheers
C@34
.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
