Forum Replies Created
Hi Skippyz
Welcome to the forum and i hope you enjoy your time with us.
Couple of answers to your questions:
Firstly if you are thinking about using the property as a future investment property you should switch the loan to an interest only loan with 100% offset account asap to preserve the dedcutibility of the interest going forward.
Now in regards to the suggested loan structure for your first IP i would recommend:
1) Set up a separate equity loan or Line of Credit secured against your PPOR for an amount equal to approximately 20% of the new purchase price and sufficient to cover the acqusition costs. i.e If the new purchase price is $400,000 then take out the equity loan for say $100,000.
2) With a separate lender take out an interest only fixed rate loan for $320,000.If you would rather take the IP loan to 90% then by all means do so and reduce the loan on your PPOR to 10% plus acqusition costs but remember you may incur LMI. Do not use your own savings as deposit as this again will reduce the amount of interest you can claim as a deduction.
Once the IP has increased in value increase the standalone IP loan to 80% (or 90% of the increased valuation and use the raised funds to repay the equity loan / LOC secured against your PPOR. This enables you to repeat the process for the next and ongoing IP's.
Your mortgage broker should be able to assist you with the structure and set up going forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
This will be my last response to this post as it is going nowhere
1. Sorry CBA do still take Pension income into consideration. You might check their website to confirm this.
Also as i have mentioned previously under NCCP there is no difference in the amount you can service based on PAYG income or disability income and anyone who tells you to the contrary has no idea of legislation and responsible lending requirements.
2. Nick at NAB Mackay might be a nice chap but he has no authority to approve a deal. Mackay approvals are normally done here in Brisbane and he would have no sway over a deal than any other NAB manager or Broker. NAB with effect from this week have integrated Valex into their valuation system so valuers are allocated randomly. You can still use a panel valuer and cover the cost yourself.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Apologies Joe i have another Joe in Vic who is a client and in the Building industry who is doing an owner build at the moment.
Wont tell you what his wife's name is but it is darn coincidence as it is exactly the same.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry couple of things to clarify and correct:
1) You would not now what your Credit score as this an internal bank score and not available to the client. NAB operate an auto approval system and only where the application does not pass is the application referred to Credit.
2) CBA do take disability pension income as does every other lender. Whether the living expense criteria meant the deal didnt get over the line is different.
3) If you disagreed with the NAB valuation you are certainly entitled to obtain your own panel valuation and the Bank will accept this.
Other than this the rest is conjecture.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tools just to let you know joe has a lot of Building experience.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi RTB
Unfortunately you cannot have a the Builder write up the Contract and take the liability and you receive the cheques and payment from the financier.
Lenders will draw the progress payments in favour of the Builder and he in turn can bank it accordingly.
If however you wanted to access cash funds for certain trades, materials etc you could look at a Line of Credit against the land and then progress draws against the construction.
Not ever lender will like this or indeed will consider but we have a couple of such deals going through at the moment for forum members who are in a similar boat to yourself.
Drop us a line if you want further information.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Obviously the Yield is one thing but you also need to remember owning property even ununcumbered property will still incur costs, Rates, Insurance Land Tax etc (some of course might be reduced if the lessor is paying the costs).
You also need to accept that you need to put a fair amount of your own capital for each purchase.
For a $500,000 Com property you are probably going to need a deposit of around 175K to cover deposit and acquisition costs.
This of course will vary depending on what style of Commercial you end up buying.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Obviously cannot comment as we dont have any real data whatsoever however considering you mention you have been to NAB / CBA private lending etc etc it could be something simple as a Credit score problem.
All lenders change credit policy as they go so as has been mentioned NAB are not alone.
Under NCCP pension income is considered the same as any other income so this would not be the reason the loan has been declined.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Emma
Rather than give it to you verbatim probably easier to refer you to the appropriate calculation in the ATO website and you can calculate yourself
http://www.ato.gov.au/individuals/content.aspx?menuid=44733&doc=/content/42616.htm&page=8&H8
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Find myself asking why the post was made in the first place if you have already decided to sell your PPOR.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi PB
Every lender has a different standard variable rate which they advertise on their website and in most National Publications on a regular basis.
What you have to bear in mind is a 1% discount from one lender might equate to a 0.85% discount with another because they have a lower standard variable rate.
Interestingly enough after the recent rate reduction Tuesday Anz have announced that they will review their SVR monthly irrespective of any action the RBA take in relation to the Cash Rate. As overseas funding costs increase the margin between the 2 indexes will increase.
In saying all of this the interest rate is probably the last question any long term investor should be concerned with as structure is far more important. The lowest interest rate does not mean the best product as there 101 considerations.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Must admit i havent read the article but API did an article on me and our portfolio last year (I can email you a copy if you want to read it)
I was lucky arriving from the UK some 18 years ago when the GBP pound was strong and managed to purchase our First PPOR (now IP) and another IP for cash straight up and then gear from there. 40 properties later the rest is history.
Big difference is we wanted to and were able to pay down debt like it was going out fashion and next year will have paid off ever loan we have leaving us with all properties totally unencumbered. Might have to start buying again then.
Whilst 95% lvr refinance is available the costs of doing so would not be worthwhile so patience, refurbing coupled with equity release and a couple of other strategies are about what you are limited to. I was fortunate enough to also be engaged in a large Vendor Finance business here in Qld and that puts cash flow right in your pocket from day 1. This helped us pay down the negative gearing properties.
Dont let anyone tell you it cant be done as it all boils done to structure and the initial set up.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Subject to the normal income / credit qualifications he would qualify with some lenders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agreed Derek i skipped 1 and went straight to the grey hairs and wrinkles as my API photo can verify.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
No totally disagree it is just who you deal with in Credit.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agree with Michael it an NAB internal issue.
Just settled a refi for a client who had a couple of IP's in Moranbah and both valuer and lender didnt have an issue with the Tenancy Agreement we provided showing the higher rental yield.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Matt stick the funds in a 100% offset account whilst you think about it and that will reduce the effect of the negative gearing.
Weight up whether you want to look at fixing the interest rates especially if the lender does not pass on the full Reserve Bank interest rate cut as this will aid your serviceability going forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Andrew agree although must admit November and December has been our busiest for 5 years with record numbers of Contracts arriving on my desk for both Brisbane and inter state.
Either investors not too concerned about rates or better than me at predicting the falls.
All we need now is lenders to actually pass on the reductions and that will be a feat in its own right.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Ok will read and report back.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jack
Did you get my email from last night about the revised rates?Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
