- Originally posted by foundation:
So I’d take it this is either:
a) A low introductory rate loan with hefty break fees to prevent borrowers from refinancing after the intro rate runs out.
b) A US style negative amortisation loan where borrowers make only part of the interest payment, the remainder is added to the outstanding capital.But if it’s a, then surely there’s no guarantee that rents will rise enough to ensure cf= by the time the introductory rate gets above the standard variable rate? Remembering that rents on average rise 3% pa, if the property is returning 4% gross rental yield, then it will take 21 years of rents rising and equivilent interest rate rises (4.0%, 4.12%, 4.24%, 4.37%…) for the repayment rate to hit 7.44%…[blink]
Can’t be.
I’m leaning towards option b). Cripes. “I’m leavin’ on a jet plane…”
F.[cowboy2]
even in the booming Perth market of the last several years the rents have stubbornly refused to move – what use to be a 5% return is sitting around 2.5% or less. To bank this against a mortgage would be a very risky move IMO
I find all this speculation very intersting.
Over 800 people were at the Melbourne seminar and there will be over 600 in Sydney and Brisbane next weekend.
Its a pity none of the attendees have posted what its all about.
I’m going to [biggrin]….have fun speculating or we will see you next weekend.
Deatils at: –
http://www.metropole.com.au/newsletter/0606/juneflash.htm
By the way Magellan- no one asked for the 200% money back thingie[exhappy]
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 15,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auHi Magellan,
Look at it this way- Michael Yardney has organised for 600 like minded people to come and network with you. I am a bit of a seminar junky and the great people I have met, friendships I have made and opportunities that I have uncovered at every event has all been worth the time, money and effort spent.
I am looking forward to the seminar. I hope to see you there. I look like this [handlebars]- and if you don’t like the seminar, you can get twice your thingie back [biggrin]
Todd Burns
http://www.freepropertyhelp.com.auWell theres finally some more info on this loan in the latest investors direct newsletter –
See link below:
http://www.investorsdirect.com.au/newsletters/072006/story1.htmSounds like a great deal to me, id like to sign for 3 or 4, pity they didnt leave any clues on how to apply?? Or the requirements…
Anybody know?
I would attend a seminar but im in WA and I dont see any booked for WA[angry2]
The newsletter states many people have switched there loans over to this product since its launch… Is there any forum members out there who have done this and can maybe give some more info??Thanks
Grant!Originally posted by grant7:Sounds like a great deal to me, id like to sign for 3 or 4, pity they didnt leave any clues on how to apply??
How exactly is it a great deal?
By the end of the 5th year, you’ll be paying (on their $400k example) an extra $500 per month extra as compared to fixing the entire $400k at 6.99% (which is easily doable NOW). Add 30 years of repayments, and that figure comes to almost an additional $170,000 in interest payments, plus the repayment of the $44,600 in capitalised interest, so all up you’re down to the tune of around $210,000!Is this a great deal?
Try running the figures for a more realistic 3/4% long term appreciation and things look pretty sour… Try with the even more likely -5% to -10%pa correction for the first few years…
But I imagine there will be no shortage of takers for this product, after all, the old saying “a fool and his money…”F.[cowboy2]
Originally posted by grant7:Well theres finally some more info on this loan in the latest investors direct newsletter –
See link below:
http://www.investorsdirect.com.au/newsletters/072006/story1.htmSounds like a great deal to me, id like to sign for 3 or 4, pity they didnt leave any clues on how to apply?? Or the requirements…
Anybody know?
I would attend a seminar but im in WA and I dont see any booked for WA[angry2]
The newsletter states many people have switched there loans over to this product since its launch… Is there any forum members out there who have done this and can maybe give some more info??Thanks
Grant!Grant there have been so many requests to do a seminar in Perth, we intend to conduct a seminar there in September.
Watch out for it through http://www.PropertyUpdate.com.au
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 15,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auOriginally posted by foundation
How exactly is it a great deal?
By the end of the 5th year, you’ll be paying (on their $400k example) an extra $500 per month extra as compared to fixing the entire $400k at 6.99% (which is easily doable NOW). Add 30 years of repayments, and that figure comes to almost an additional $170,000 in interest payments, plus the repayment of the $44,600 in capitalised interest, so all up you’re down to the tune of around $210,000!Is this a great deal?
Try running the figures for a more realistic 3/4% long term appreciation and things look pretty sour… Try with the even more likely -5% to -10%pa correction for the first few years…
But I imagine there will be no shortage of takers for this product, after all, the old saying “a fool and his money…”F.
Well looking at the figures even if 0 capital growth the worst case is after 5 yrs you got a 90% Lodoc with no Mortgage insurance, fixed for 5 years at about 8%. Pretty good.
But the bonus is that your interest payments are deferred early on. On the same figures at the end of 3 yrs you would be 20k better of in cash flow compared to normal loan.
This might not suit everyone, but it suits me as my strategy is to free up every $$ possible and max out every LVR possible to accumulate max. development sites. Within a year or 2 I will have planning approval or subdivided the site vastly improving its LVR anyway. So for me any CG is only a bonus, not a neccesity.
If the extra cash flow meant I can buy an extra site or 2 and gain an extra 2 or 300k equity then I dont mind paying a bit more for the money.
Anyway who said you have to stick to that loan for 30 years? Just refinance after 5 years to a better rate, even if you dont develop and dont really buy well you should still have enough LVR to refinance at whatever is the best cheap rate around.
Foundation if your seeing -10% to 4% growth then maybe you would be better investing in shares or something (maybe oil!!…)
However I still need to see the full details on the loan to make a final judgement, but on face value it suits me.
Until then me and any other “fools” [wacko] look forward to the coming Perth seminar.Cheers
GrantHi, I thought that it sounded too good to be true but having looked at it for the 1st time today, it might be useful to me.
If I have 5 newly developed houses that I’m very sure have potential for capital growth, then I want to hold them as rental properties for 5+ years because after that, the GST no longer applies. CGT is much less painful than the tax on profit upon immediate sale.
This loan product then gives me a way to wait out the regulation 5 years while I accummulate either CG or tax savings.
Any additional comment whether +ve or -ve, is much appreciated.
Kum Yin
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