Can I get a loan ?

Hi Terry,

I don’t sign any contract with the tenant and that property is legally mine, if settlement took place, that means if he insists to live there, I assume, it works like someone lives in your house without your approval. So I guess as a reasonable person, should I call police?

My solicitor mentioned before if the tenant couldn’t find a place or does not want to move at 11/08, then we won’t settle… I don’t understand why it becomes the purchaser’s problem. Therefore I am seeking opinion and advice here, I want to know what is my legal right and how to enforce my legal right.

Cheers

Ferdinand

I believe the notice has been given to tenant on 13 July when the cooling off period lapsed. I am pretty sure about that, I think I need to check with the solicitor whether he has the copy of the notice or not. 30 days from 13 July will be 12 August, which I am fine.

So theoretically, the tenant can only refuse to leave anytime before 12 August? After that, they don’t really have any legal right ?

The selling agent actually is helping me now, he keeps me updated with the tenant. I actually quite believe that the tenant will be able to find a place before 11/08. Only my solicitor’s response drove me mad, when he said we couldn’t do anything other than do not settle if the tenant is still there, which is quite possible.

I understand now what I can do, which is waiting.

Thanks for your opinion and advice, Michael and Terry.

Hi Guys,

Now I am waiting for the settlement. The tenant has indicated to be able to move out on 13th, and settlement can take place on 15th. That means 4 days later than original expected settlement date, which I am fine.

For the time being, I am thinking about what will happen in the next 2-3 years. My loan structure is Interest Only for 5 years. I understand that the purpose is flexibility in case I want to change the dwelling to become IP and tax benefit of it. But I don’t think we will rent out that place. The reasons are below:

1. The property as an IP ,won’t be a positive cash flow property by its own. The vacancy rate will be definitely low, as it is located 300 metres from a well-known university. But the rental rate won’t match the the interest on the loan. Unless I use my offset account to reduce the interest charge. Mr.Excel told me that it will be -600 to -800 p/month. But one think I’m pretty sure, the capital growth will be above average.

2. I personally like the property, and when I bought it, I was doing calculation and consideration as a PPOR. That means, I don’t care about rental yield, undervalued property, etc. But I know clearly it is not overvalued and it is not a lemon.

Based on those reasons, I think if I want to create wealth in the foreseeable future, I need to buy IPs somewhere else and that means (what I know), getting my PPOR revalued and top up the loan, with little help from my saving, I should be able to buy more. My wife and I are not ambitious or obsessed of having 100 properties. We think about 3-5 manageable, safe (capital growth and vacancy rate), and low to medium risk properties (including PPOR). Which means one or two negative CF properties will be fine as long as it meets those conditions mentioned above.

My wife personally is not comfortable (like most of people out there) at seeing our offset account getting bigger and bigger, and it is a transaction account, which she is worried about the safety. We were arguing about this, and she might want to repay the balance of the loan in case no investment plan in 3 years. We have done our calculation since beginning, if we make extra repayments, the whole loan balance will be repaid in 6-7 years (if nothing major, unexpected and unpleasant happened of course).

My question is, is the structure still good for this plan? (i.e. free up some equities and use it for the IP purchases). Any pros and cons will be great.

Many thanks

Ferdinand

Thanks Terry,

But I still have a question, is the IO structure and offset account still good if I get the property revalued, top up the loan, and free up some equities to buy IP somewhere else ? That means I will have another loan (90% LVR probably), original loan will be getting bigger and untouched balance in the offset account (in case the freed equities enough to cover the the 10% of second loan).

Many Thanks

Ferdinand

What you were saying is if I buy IPs and make it IO, don’t use an offset account attached to it ?

If say it I get it topped up, and free up 30k and use it as the 10 percent of the IP, as a separate loan, will the interest on it also fully deductible?