How to structure my loan and good mortgage broker in NSW

Hi steve,
There’s a lot of numbers there- i will have to sit down and work it out and post back later – bur for now i will answer your 4 questions.

1. Trust is quite simple- it’s similar to a company, but the pit fall is WHICH type of trust you want to open and What structure/how – this will have a huge bearing in term of your tax and financial objective – you will need to speak to a accountant/ financial planer for this part.

2. The high LVR has started to come back. 85% LVR – no LMI. Any LVR higher- LMI is payable, but depending on which lender you go with it can be reduced by 50%.

3. I will need to work out your above number to see what your serviceability looks like.

4. $500 is over priced for a valuer, it’s normally around $220 for a private valuer! can i ask whats the reason for getting a valuer? It sounds like your after a way to increase your rent-wouldn;t speaking to your agent who deals with this on a regular basis make more sense?

Regards
Michael

I think he’s talking about a QS.

Cheers

Jamie

well if that $500 for a depreciation schedule -That’s fine.

Paying LMI should not be a taboo, for some property investors ( like my self) they will use LMI as part of their wealth creation strategy; as it has some tax advantages+ ability to invest into another project faster (better cash flow) .
Im going to make a huge assumption here- since you can afford a mortgage of >$600,000 in north shore property + another IP purchase- your combine house hold income is relatively high- Having this IP at a higher LVR say at 85-90% LVR with the LMI capped into the loan may be beneficial in term of the interest deduction ( tax deduction) – This will free up a lot of cash for you to purchase your next IP + cash for Holiday and spare cash.

The way i will structure this loan ( subject to serviceability) is what Jamie has mentioned; Refin your HSBC as a SPLIT loan ( this is a must) one split for the PPOR and another for IP-use this for the deposit/renovations/ Valuers cost – hence you are using your equity to finance the cost involved for the IP + the interest is tax deductible. Also loan will be done as a 100% offset for the PPOR part, with interest only for both splits.

Just one note on the trust, it will not give you any “personal ” tax advantage” – ie the lost or interest from the trust can not be claimed via your personal income.
The main benefit of a trust ( My assumption and answers are based on a discretionary trust) are;

1. Asset Protection
2. Ability to stream incomes
3. Taxation advantage
4.Limited liability

Potential disadvantages include:

1. Possible implications for capital gains tax
2. Distribution of tax losses
3. Establishment costs and administration costs

Regards
Michael

Terryw- in regards about the accountant- I absolutely agree!
i personally had to replace my accountant who i have been doing business for the last 10 years, because he didn’t entirely understand how to set up the trust to my needs. A shame..

Regards
Michael