Just wanting to check some advice I have got from the bank.
He has suggested we use a company called deposit power for any deposits we want to make, has anyone done this before?
We are looking at accessing the equity in our house to fund our next purchase, I've just had a meeting with the bank and they want to 'top up' the loan we already have (which is in our name and the house will one day be our PPOR). They don't want to do a LOC for some reason?
Also, talking to them about purchasing a property in a different entity they said I need to show 2 years financials for that entity (trust or company). Do I get around that by going guarantor for the trust?
Hi there
Deposit power offer deposit bonds. You use these in replace of a cash deposit when exchanging contracts.
The loan needs to be set up as a second split (which can be a LOC or an interest only loan). It's important that it's set-up as a separate split so you can identify the deductible and non-deductible portions.
What sort of trust?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Deposit Power will provide you with a temporary cheque deposit which you can provide to the agent. This is if you don't have a deposit until settlement. The fee for this is 1.2% of the deposit amount. So if the deposit amount is $40,000 then its $40,000 x 1.2% = $480. Please note that this is payable at settlement. Approval will take around 24 hours.
Why has the bank told you that you need to redraw as it doesn't sound correct?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
If you need to know how much it will cost – https://www.depositpower.com.au/publics/guaranteeQuote.aspx
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Should I go with the top up as opposed to a LOC?
Jamie – it's a family trust.
You need to be very careful of how you structure your loan – I am smelling trouble.
You have a few options – I would prefer a standalone facility (variable loan) with a linked offset. Have the funds sitting in the offset until you need to use it for the new purchase.
This whole thing looks like it was done badly especially if they are talking about Deposit Power.
a) it doesn't sound like you need the Deposit Power and thus you don't need to pay the fee and
b) no reason why you cannot set up a separate facility
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Not sure if parking the funds in an offset is the best option, it could potentially jeapordise the deductibility of the loan. Probably best to place the funds back onto the loan that's been set up and redraw when required. Having said that, I'm not an accountant.
It's important that these funds be used solely for IP purposes.
The deposit bond thing does seem a bit weird.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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