I have had fantastic help/sympathy/encouragement from people on the forum. Wondering if you can advise me further?
To recap I started with Mortgage Broker who assured me the finance would go through with the bank on this assurance I went unconditionl on the contract..Then found out that broker had been sacked (gave wrong figures to the bank and bank knocked finance back).
Desperation set in and went to St George (time running out and was this stage legally bound to contract). I explained that I had 2 other IO properties and wanted to be able to purchase the new property and be able to draw equity to do any renos/further purchasing.
I have a portfolio loan with 2 sub accounts the 3 accounts will cost me $36 per month to run and I have not got the equity to play with as promised by customer service Manager (she has now left too)
Is there anything I could to either better set up the loan to be able to tap into equity (I have been told today that loan is at it’s max) or am I better looking around to find some other bank to restructure?
Sorry this is so long, if you haven’t fallen asleep by now, can you please advise me?
Many thanks[biggrin]
Jenny1
There is certainly better options. Another lender will allow you to borrow considerably more than St George. They are not the best regarding serviceability.
To help you better, we need to know current loan amounts, security value, purchase price of new property, etc.
Assuming you can service the loans on your current income and rental income, it should just be a matter of restructuring your loans.
Robert Bou-Hamdan
Mortgage AdviserRobert loan amounts as follows:
LOAN AMOUNT VALUED AT RENT
$220,000 $380,000 $350.00 pw
$311,000 $340,000 $320.00 pw
(purchased Aug 04)
$203,000 $205,000 $200.00 pw
(purchased April 04 no tenant as yet).Cheers
Jenny1
734,000 / 925,000 only totals 79.35% LVR
If the valuations stack up and serviceability is not an issue, you should have no problem getting a loan at 6.62% p.a. across the portfolio. Some good structuring will also avoid having to cross-collateralise.
Robert Bou-Hamdan
Mortgage AdviserThank you Robert
Are you talking about restructuring with another lender, if so I too live in the ACT are you able to recommend someone that is savy re structuring investment loans?
Cheers
Jenny1
Jason is great. Can you email me your contact number and name and I will get him to call you?
Robert Bou-Hamdan
Mortgage AdviserJust out of curiosity, do you have some kind of strategy for repaying seven hundred and thirty odd thousand dollars of debt?
I’m interested in the ‘big picture’.
Cheers, F.[cowboy2]Foundation
At this stage of my life I am in a position where I have no outgoings I live, eat and have all utilities paid for by my employer. I own an old car, have some shares, and don’t have a credit card.
The rents collected from my properties pay a large portion of my mortgages I pay any other monies into reducing my debt.
I am wanting to hold onto these properties for a long period of time to appreciate sell one or two and this will reduce my debt.
Cheers
Jenny1
Sounds like a damn good plan to me!
Robert Bou-Hamdan
Mortgage AdviserYup, it sure does, especially if you are paying off some principal / offset. I asked because I recently helped a friend work out the difference between his then strategy of IO payments only and actual repayment with similar numbers to yours. The difference over 15 years was quite astonishing over a whole range of projected HPI and CPI scenarios.
He is now making PI repayments.
Curiously, his mortgage broker seemed fairly peeved that his ‘advice’ was being ignored, which raised my suspicionometer. Do mortgage brokers recieve an ongoing payment based on the debt level or is their fee once off at the beginning of the loan?
Ie is it in a mortgage broker’s financial interest to push IO mortgages?
Robert?
Cheers, F.[cowboy2]It is very much in a broker’s interest to sell interest only loans as their trailing commission is based on the outstanding loan amount.
Having said this, I always push interest only loans with offset accounts for various reasons. If someone has non-deductible debt, the reason is obvious. If someone has just investment properties, they have the option of reducing their debt while maintaining many other advantages. This call is made by their accountant regarding taxation issues.
Regarding the trailing commission received by brokers, it also reduces when money is put into the offset account as it reduces the loan amount that interest is calculated against.
I often advise clients, if they want to reduce debt, to pay the equivalent of the principal and interest repayment into an offset but only the interest only amount into the actual loan. Also, by paying half the minimum monthly principal and interest repayment each fortnight into the offset, nearly 6 years is taken off the term of the loan. Putting additional income into the offset account reduces the loan term exponentially!!!
Robert Bou-Hamdan
Mortgage AdviserBrokers do receive a trailing commisison based on loan balance, so a higher balance would mean a higher comm. But this would only be small amounts and probably would not influence anyone.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Whether I recommend IO or P&I depends entirely on the client’s profile.
People paying down a home with no intention of buying more property will usually benefit from P&I.
Those wanting to buy multiple IP’s are often better off on IO.
Al lthe other cases between these two extremes will usually depend on the clients intentions, comfort factor and tax situation.
As far as trail is concerned i had never actually considered that IO sees me with slightly more income – I don’t imagine it would be very much really.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Rob was posting while I was typing (yes it took me 20 min to finish). But I would like to add, if an offset is used, for the purposes of calculating trailing commission, most lenders calculate the trailer based on loan amount less what is in the offset account.
So brokers recomending this strategy are not doing it just to increase commissions.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Interesting stuff, thanks guys. I will pass the info on to my friend, and see what he thinks. He may be prepared to make the broker’s life very difficult… after all, he very clearly stepped over the ‘financial advice’ line on a number of occasions. That is what raised our suspicions that he might be benefiting from the IO situation.
Cheers, F.[cowboy2]Agreed,
A mortgage Broker will receive less trailing commission on a loan structured with an active 100% offset linked to that particular loan.As my colleagues have mentioned, P&I or I.O doesn’t make a great deal of difference to a M Brokers trail,
I like to think the majority of Mortgage Brokers have there clients best interest at heart, and those that don’t would not last to long in a profession that is largely built on ones credibility & reputation, cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
This Forum is so lucky to have such a collection of creditable brokers who take the time to help/answer questions re finance etc.
I have had the pleasure of you either speaking/ emailing me with answers to various concerns and have always enjoyed the debate/knowledge that you guys pass on through the forum. Learning always as I go along.
I wanted to thank Robert Bou-Hamdan who took the time to email me privately and pass on a colleague
“Jason from Canberra” (who I met today over coffee). Robert’s contact gave me the time and courtesy of listening to my plight and then gave me different scenarios re my investing for now and the future, after speaking to him I found that I felt comfortable with his advice and I was convinced after our talk it was not all doom and gloom. [blush2]And as Rob said Jason is a great bloke!
Thank you [biggrin]
Jenny
Jenny
Jenny1
Thanks for that Jenny.
I actually met Jason through Simon Macks (aka Mortgage Hunter, aka Super Moderator) from this forum. He is a good bloke as well.
Unfortunately, he is from Newcastle but we won’t hold that against him!!!
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by The Mortgage Adviser:Unfortunately, he is from Newcastle but we won’t hold that against him!!!
Robert Bou-Hamdan
Ahh.. such blasphemy…
You should travel up and come sailing one afternoon Rob – spend the afternoon on Lake Macquarie and you wont ever want to go back to that festering cesspit you call Sydney.
Simon even has a new puppy he might let you pat (looks like an inside out Ugg boot [trigger])
Jay.
I would come sailing but I am worried Simon’s boat might sink if I jump on!!!
Interested imagery regarding the dog though… have to see it.
Robert Bou-Hamdan
Mortgage Adviser
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