First investment property

1) Your choice, work out your numbers for if the deposit bond % charge costs more or less then the amount of interest your cash would earn (minus tax) in your own bank acccount.

2) Depends what state you are in. But usually 0, Some agents take $500 which is completely refunded if you are unsuccessful. If you are really really interested in the property tell the agent you wish to go straight onto a contract. They will usually accept and if they deny its for these reasons, A) they want to play your offer onto other people and get a higher offer. Your offer is to low and they know it wont be accepted or C) they want to try and hold your offer while collecting other offers to present to the vendor all at once.

3) If you are ripping out and dumping any material its good to get a scrapping report schedule done before the reno. (which identifies any residual value in ie blinds, floor coverings, stove etc and you get a instant tax write off) And then after the reno get a full depreciation schedule.. Tip for the depreciation schedule is that if your Products you use in your renovation are really cheap. Just mention that you installed new blinds to the quantitiy surveyor and they will put on their value. Ie if you paid $500 for all the blinds dont mention it. They will take a assumed value which could be higher then that. Mention big ticket items, Stove, dishwasher etc.

4) Once a property is under offer. (Not under contract) You should just put in your best and only offer. Cash and unconditional can help if you are certain of finance.

Another clause to include that is less "damaging in a vendors eyes, ie less chance you'll pull out or the contract is void" is offering subject to a satisfactory valuation.

Hi Jade

Welcome aboard

1. How are you looking to fund the deposit/costs? With equity in another property or with savings? If the latter – do you have equity in another property that you could access?

2. Some agents will request a small holding deposit before contracts are exchanged – it's usually just a good will gesture. When exchanging contracts – 10% is the norm but negotiating a 5% deposit is common.

3. What wilko said – can't really elaborate on that.

4. Agree with Wilko also – you're essentially trying to gazump someone so you'll need to produce a pretty stong offer.

Cheers

Jamie

The short answer to your question is No. You won't save money on tax really by using a bond not much anyway. 

– a deposit bond is given on behalf of either cash or equity .

In this case As a first home buyer. If you were to get a deposit bond from a bank.

lets say you have 40k in cash. 

They assume your cash as security (a promise that your deposit bond is actually worth 40k) the bank then charge you a percentage fee. Sometimes it's a percentage some times it's a set fee say $400. 

They give you a piece of paper saying its worth 40k and when you purchase a property the agent takes this. Your deposit money is then redeemable by him on settlement. 

This type of arrangement only really works well if you are negotiating long settlements. Ie 6 months or a year whereby having your cash in a offset account say if you had a existing loan would be saving you 5% a year. Whilst a once off set fee for a deposit bond for a year might be less then the cost savings made by having the money in the offset account. 

Keep it simple. Save a minimum of 10-25 % of the value of your first home before purchasing it . If you can save 15% – the LMI costs under 90% of the properties value can make a significant difference. And as usual no LMI (lenders mortgage insurance) on purchasers at 80% LVR (loan to value ratio) house worth 500k loan at 400k would be a 80% LVR. (except for self employed borrowers) 

1) a deposit bond. Is just the representation of your cash in a bank or equity in a property or shares. Identifying that you have that money available upon settlement. It's basically like a big cheque that the bank write out out on a piece of paper and say this is worth eg 30k. Whilst you keep your actual money in the bank and your cheque doesn't clear until settlement. It's just a piece of paper representing money/cash/security you have elsewhere but cannot or might not want to access immediately. 

there are not that many advantages with using them besides long settlements or when you have a inability to release cash or other assets to pay for deposit. 

2) PPOR = principal place of residence, where you live or reside. (You can rent elsewhere for work and still own a PPOR eleswhere)

3) 100 % financing – with a personal and secured component 

or a Guarantor loan by a family member, parent or spouse. Which could achieve 105% finance. 

If you struggling to save a deposit though already, do you think your cashflow will be better with a mortgage ? Or is it for investment purposes 

Thanks for your response.

1. Is a deposit bond able to be used in a situation where you may buy a property for less than it's valued price and use that equity as a deposit? I thought i read something about this recently i.e. property value $200k and you manage to secure it as $190k. Is that $10k able to be used as a deposit?
2. Thanks
3. Investment purposes. I have quite cheap rent where I am and even with the extra stamp duty I've worked out I would be better off just buying a place and renting it out. I don't struggle paying my bills and have a decent income, it's just the saving part that seems to be taking too long.

Thanks Richard,

Any tips on where to start researching the correct structuring?

Wilko Commercial lending is totally different and to borrow against the valuation is often acceptable practice.

You would normally only borrow against valuation on a residential property where it is a favourable purchase.

Cheers

Yours in Finance

Get a decent broker on side. They'll listen to your longer term plans, discuss structure and answer any questions you have.

Cheers

Jamie