Hello all,
has anyone settled the new split loan facility as yet? Any feedback ?
Quick explanation for those who have not seen it as yet. The bank charges 7.49% nothing outstanding, except, they charge 3.99% which you must repay as normal, the remainder of 3.5% is capitalised (added to the loanand tax deductible ,check with your accountant). This is common in construction development loans but unusual for residential . This product converts most properties to positive geared. I believe it is dangerous if people over commit but it is fantastic for cash flow
Wholesale Property Brokers
http://www.wpb.com.au
Australia*Hong Kong*Singapore*India*MalaysiaThis loan has been very popular here in the U.S of recent years, and there is expected to be massive foreclosures in the next 1-2 years when the rates convert back to the normal rate.
People will find they have loan repayments they can’t afford, and a house they owe more on than when they started with. Not only that, a lot of areas are experiencing a ‘correction’ so their house may have gone down in value.
A girl my wife works with had to sell her condo in San Pedro 2 months ago for a loss, and had to take out a $37k personal loan to get out of it. She will be paying that loan for years with nothing to show for it at the end. Very sad.Cheers,
Marc.
[email protected]These loans very popular in the UK in the 80’s with rising house prices but by the end of the decade many people ended handing back their house keys and taking out negative equity loans for the next 10 years to repay the shortfall.
All looks rosy in a rising market.
Rather stick with a conventional loan and then wrap the property and still get great + cash flow.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
hi just food for thought on this kind of product..i have done the figures on it & yes you owe more at the end but for my own properties they actually come out ahead and will allow me to hold more properties. this is due to the region my properties are in are still experiencing growth with a high rental demand.
The best thing is obviosly the positive cash flow…
You can actually start the recapitilisation again at the end of 3 years, so you will have 6 years of lower repayments and then dont have to pay any DEF.
The actual fact is the interest rate is just above a lodoc interest rate
Im continuing to investigate the usefullness of this product on my own invesments and if all goes well I will offer this to my clients.
kind regards
kylieKyle
These loans are just capitalsing interest. Nothing special, many loans can do it – lower interest rates and lower DEFs.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
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