Yes thats how you could structure to avoid crossing. I also generally recommend that as the values of the IPs rise the 20% deposit loan be moved over to be secured by the investment property it relates to. But this might mean unmixing the loan first (2nd one in your example) if it had been used for 2 or more properties.

This is like insurance in a way. You don’t need to insure your house until you smell smoke, but by then it is too late.

I can think of real life examples x 3

Peter had 2 properties and the LVRs were relatively high. He had a heart attack and his wife left him and lost his job (not necessarily in that order). He needed to sell one property to…[Read more]

what is wholesaling?

what is ‘wholesailinng’?

Yes, I was probably not thinking about this sort of thing when I wrote the above. There are 2 aspects to trusts and asset protection

a) you personally become bankrupt

b) the trust itself is sued – the trustee actually.

If you personally become bankrupt assets you hold on trust are generally not available to creditors.

If you as trustee are…[Read more]

Buying in a trust won’t protect you either though. if you are the trustee you will be personally liable for the trust debts, the trust assets and your personal assets will be at risk.

If you have a company as trustee the company’s assets and the trust assets will be at risk. But the lender will want a personal guarantee from all directors so the…[Read more]

Like that article says they are very rare in Australia.

I have been a broker for over 20 years and have never seen a non-recourse loan for residential property other than for SMSFs.

They just don’t exist. There used to be some available for commercial property at around 30% LVR. Not sure if they still are.

Here is an article I wrote which…[Read more]

I think you might be misunderstanding what ‘non-recourse’ means. You might be referring to a loan secured by one property? A non-cross collateralised loan. This is different to non-recourse which means the lender only has the ability to claim against property held as security for the loan.

Why?

Ok, I have watched the first video now and you mention move about non-recourse loans. Even where you have loans with separate banks if you default on one loan they can take the property secured by the mortgage and then if there was a shortfall they can then come after the second property, or other assets, even though they are not mortgaged. They…[Read more]

I watched the 2nd video and it was pretty good. Love your acting.

But you called the bank the borrower when they should be the lender (usually) and I am not sure what you meant by “I don’t want a non-recourse loan”.

Non-recourse loans generally only exist with superfunds and these are loans where the lender’s only recourse if to the security…[Read more]

Thats like asking what the best food is. Ice cream – but not so good for breakfast perhaps.

redraw means borrow more money, in this case up to the limit – until the loan term ends.

This is not the case. There are no rates for CGT in Australia. The capital gain gets added to other income. It is also not financial advice when advising on capital gains, but tax adice.

if it is the end of the loan term of course you would need to pay it back. This is just a loan like all of loans really.

You will owe the lender the full amount plus interest. But won’t need to pay it all back until the end of the loan term

If you pay more than the interest you will be reducing the loan amount – but might be able to access it for redraw.

say the interest is $20, you could repay $20.01 if you wanted to. Generally you will only need to pay the interest, with some lenders and products there is no requirement for that until the limit is reached. Interest will be capitalised.

Sorry, I can’t follow so best thing for you would be to get some proper advice

I don’t know what circumstances you are referring to, but it is possible to move back into the original main residence. You could even use the 6 year rule on the second main residence – whether you should or not will depend on the circumstances.