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Hi Karl,
I agree to most of what has been said above.
Line of Credit can be great product to reduce you debt and pay off you loan as soon as possible, in my experience most Financial Planner will recommend this product to help their client reduce their clients debt as soon as possible.
It all depends on the features of the LOC (Line of Credit) and making sure that it suites you and your family. One of the best LOC products I have seen is the ING Direct LOC, this product comes with a NIVA Card (NIVA stands for Nil Interest Visa Card) the NIVA will allow you to make purchases and even draw cash out of the ATM without paying interest on the credit card for up to 55 days or more commonly the credit card is swept monthly from the LOC so interest only for 30 days.
The structure is normally that you put all your pay into the LOC account and live off the NVIA card, as your pay is still in your account this will offset against the amount of interest your are paying (as per the above example $10 with $1 extra in the account, interest is only paid $9) along with that you are not paying interest on your living expenses and bills.
Adelaide and Bendigo Bank also offer this product, can you even do a combo loan With a LOC and if required a 100% offset split (one rate for LOC and cheaper rate for the 100% Offset).
Prior to leaving St George and incurring a discharge fee and new setup cost I would speak to a Branch Manageror at St George or your Mortgage Broker about the feature of your LOC if you still believe that this is not the product for you I would see if they would allow you to do a produce variation (this is just changing product) this is normally just a once off fee. Always check your exit cost, new loan setup cost and mortgage insurance cost (if applicable) on the new loan prior to making any change.ING Direct (you can go direct or through a mortgage broker) have a product called "Redcued Equity Fee" (REF) this is where they will self insure (not go to mortgage insurance) for purchase loans up to 95% LVR. This is also cheaper then going to either Genworth or QBE mortgage insures. On this product they will also allow you to increase your loan back up to 95%.
I work at a Mortgage Manager and one of our funders is ING Bank, we will allow you to increase in 3 months, sorry not two.Another option to save you on valaution cost, is to request for a valuation that is "As if complete" this means that if you have a build contract of quotes for the work you want done, we can submitt that to the valaution and he will value the property has if the improvement on the property have been completed. The finder will want the improvement however to from the loan amount 95% of the property with the work done) and they will want to pay the builders/trafies directly. This will however save you time and money. Only of course if you are not doing the work yourself.
Requirements for the REF policy are: clear credit (no defaults), at least 2 years in current employment and must have genuine savings (this is money that you have saved. No money coming from First HOme Owners Grant ect. only 5% required)
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Hi Keiko,
ING Direct (you can go direct or through a mortgage broker) have a product called “Redcued Equity Fee” (REF) this is where they will self insure (not go to mortgage insurance) for purchase loans up to 95% LVR. This is also cheaper then going to either Genworth or QBE mortgage insures. On this product they will also allow you to increase your loan back up to 95%.
I work at a Mortgage Manager and one of our funders is ING Bank, we will allow you to increase in 3 months, sorry not two.Another option to save you on valaution cost, is to request for a valuation that is “As if complete” this means that if you have a build contract of quotes for the work you want done, we can submitt that to the valaution and he will value the property has if the improvement on the property have been completed. The finder will want the improvement however to from the loan amount 95% of the property with the work done) and they will want to pay the builders/trafies directly. This will however save you time and money. Only of course if you are not doing the work yourself.
Requirements for the REF policy are: clear credit (no defaults), at least 2 years in current employment and must have genuine savings (this is money that you have saved. No money coming from First HOme Owners Grant ect. only 5% required)
let me know if you would like further information or would like a broker to come out and see you to best structure your loan.
Hi AJ,
The biggest issue with putting all your loans with one lender/bank is that even if you have all three properties in different loans (not crossing the properties) most banks have an all Monies clause. This means that if for any reason you default on one mortgage the bank can collect the outstanding balance from the other loans. (this can also include even your savings account if you had this with CBA as well) more information on this clause below http://www.lawlink.nsw.gov.au/lawlink/lrc/ll_lrc.nsf/pages/LRC_r107chp08
My suggestion would be to Increase one of your other loans (setting up a new split so your accountant can easily work out how much of the interest paid is for investment purposes, also you can claim the cost of a new investment property purchase over 5 years on your taxes). To keep in simple I would increase your existing investment property, on the variable split. This will save you the cost of the DEF’s and or break cost. (if you are looking a discharging this loan, check how long it will take you to make the cost up, ie is the saving on interest rate out weigh the cost).
To make sure that your owner occupied property is always keeped save in case of any lost on the investment properties (although we not plan for this things happen and you may have issues with renting or tenant issues or rates increase more than expected) I would put at least this property with a lender different to the 2 investment properties. Due to all monies clause listed above.
ING Direct have etreamly cheap fixed rates that comes with an offset account (offset account will allow you to add and redraw money during the fixed term). 3 years fixed rates are currently at 6.19% and I believe are reducing shortly.
My advice is if you can save on mortgage insurance do so, you have enough equity in your properties not to have to pay this so why do it.
Sounds like you have put yourself In a good financial position and i dont see why you would want to add mortgage insurance to your debt when it can cost up to 3% of the loan amount.Once you have the new investment property, I would suggest that you focus on reduceing all person debt (owner occupied property, credit cards ect) as possible. This will not only free up cash follow but will also only leave you with good debt (debt that can be used to reduce the amount of tax you pay, better in your pocket then the Governments)
I hope this helps, best of luck
You are able to get the Firts Home Buyer Grant if you purchase a duplex.
Please refer to the below website
http://www.osr.qld.gov.au/first-home-owner-grant/index.shtmlThere are a few options out there for you.
Bank West and Liberty are two funders that I know off hand that will lend to you with only austudy as income to service the debt, Bank West will also lend about 80% if required however it will come down to your ability to service the debt.Regarding the best way to structure your loan to best use your saved deposit, it will really depend on what you are looking to achieve in the future. The best advice I would give you is to see an accredited Mortgage Broker that will be able to sit with you in detail and go through options with you.
I would suggest that you look into an option for NRAS properties (Government funded program) if you are looking for an investment property. Although these are investment properties and you will not be able to receive the First Home Owners Grant you will be able to receive the $10k Builder Boost. This will leave you eligible to still claim the FHOG at the later date (when you are ready to purchase a property to live in) and will also allow you to use the rental income to help service you loan for a higher lend (ie save more money for your next deposit).
I work at a Non Bank Lender and would not be able to lend to you just on your Austudy income alone, however if you like I would be more than happy to give you a name and number of one of my brokers that would be able to assist. Just send me an email if you would like more information or a brokers number that is specialist in finance and property if needed.
Good Luck,
