I recently heard about a lender who will capitalise half the interest on a loan, and the borrower only needs to find the other half of the interest, thus making it possible to buy cash-flow positive properties in today’s low return climate. Can anybody tell me who the lender is? I would really appreciate it.
jane.b
i think you may be talking about Investors Direct.
This particular product can be a dangerous if the property does not appreciate at a good constant rate as you can actually end up owing more money than what the property is worth….
Many loans are able to do this, or better – capitalise all the interest up to the limit.
Terryw
Discover Home Loans
Parramatta
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hi terry,
Have you seen what investors direct are doing, what do you think?http://www.cashflowmortgage.com.au/cash_flow.html
It looks like they will continue to capitalise interest past the limit and even if the house drops in value!
Yes, I’ve seen it.
From what I understand it is just capitalising the interest, or a portion of it. They may only ask you to pay x% in year 1, but you are still being charged the full rate with the portion not paid being added on top.
There are many loans out there that can do this, some up to 90% LVR. Investors Direct probably can’t go past 90% LVR either and the example on their page does not go over 80% LVR based on value – they had assumed 10% pa growth rate!
It looks like their underlying rate is 7.45% as well – based on their example and probably before the recent rate rise. Not a bad rate, but you could get lower.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Also they were not able to get the volumes, and now the CashFlow mortgage product is apprearing all over the place.
Regards
JohnInspired Finance
(02) 9944 7776
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