Let me illustrate what happend to me when I did a lease option (made up figures but similar to what happened)

Buy for $100,000 and sell someone an option to buy at $120,000 with maybe $50 more per week rent comng in.

In 2 years property doubled in value to $200,000. Tenant exercises their option and buys it from me for $120,000.

I make a profit…[Read more]

hi Nathan

If you sell an option you are basically giving away capital growth.
You possibly could access the equity if the option holder doesn't lodge a caveat but you have to be careful you don't borrow more than the option holder can buy it from you for.

try http://www.houseofwealth.com.au

Dave

Interest is calculated daily and added to the loan monthly so extending the term won't result in reduced interest payments. It may result in reduced overall payments if PI, but you should really look at using an IO loan.

Don't know the situation in Vic, but you can probably terminate or rescind the contract if there was non disclosure like this.

$500 pa is probably a reasonable figure for the neighbour too btw as you will be using his land and wearing out his driveway etc.

Don't assume that the trust assets cannot be touched. It all depends on the structure, how it is set up and how things are conducted.

I agree with Mike on the bank side however – new trust won't be a problem if you can qualify for finance on your own.

Yes, they will be able to sell your property and apply the proceeds to pay the debt and legal fees – which will be high.
If you cannot pay then it would be preferable for you to sell rather than them as the costs and fees would be very high.

Best to talk to a solicitor.

You can check out the Duties Act (Vic) – do a search on the word "spouse" to find the relevant section.

From memory it could be done at any stage.

Since ownership will be changing you will need to redo the loan for this property

Probably the loan side of things would be equal.

Using a discretionary trust would give added tax flexibility though. You need specialised advice though as there are heaps of issues, especially if you end up making a loss.

bardon wrote:
It sounds complicated but its not all the banks do it and its just plain vanilla unit trust, you dont need a financial planner but I would recommend a tax agent though.

Its not just a plain vanilla unit trust either – you would need a special fixed unit trust. If the trust is not classed as fixed the land tax exemption may not…[Read more]

bardon wrote:
It sounds complicated but its not all the banks do it and its just plain vanilla unit trust, you dont need a financial planner but I would recommend a tax agent though.  Just check if you can refinance the whole amount and get it into your name without incurring stamp duty as Terry W suggested and that would be better way to go, no…[Read more]

raj_paras wrote:

@ Derek & Terryw – I do live in VIC. The house is owned jointly by my spouse and I. Would the spousal transfer still work for my situation.

Its more important where the house is!

If the house is in Vic then you could transfer your interest to the wife or the wife's interest to yourself without stamp duty – or maybe…

What state is the house in and do you have  a spouse?

If it is in VIC your spouse can buy it off you for full market value and stamp duty can be avoided. She/he can borrow to do so and this will release cash funds to be paid for the new home and allow the spouse to claim all interest when the property is rented out.

Some lenders would treat this as resi and some as commercial.

lukeclayton wrote:

Regarding the quote “You establish an exact loan balance as at the time the property becomes income producing. This then becomes the full amount of the investment loan. The original loan amount, current as at the time you purchased the property, is not relevant.“ .

Where did you get this quote from?
It is grossly…[Read more]

Real estate agents usually exaggerate, so knock off 10% on what they have quoted and that may give you an idea of the value.

ALso keep in mind this is the sub-divided value whereas you have one block at this stage.

Without looking at serviceability you could get up to 80 or maybe 90% of the value of the existing block, before sub-division. From…[Read more]

Yes. Third party from the beneficiaries point of view because they are using someone else's equity

This could be done by the trustee borrowing and I lending money or the beneficiary borrowing and using the trust property to secure the loan.

The equity would belong to the trust so it would be third party from the beneficia

Yes, if the deed permits.

You should change your loan to interest only if you are going to use the place as an investment. This will lower the loan amount.

You could get under 6% with offset accounts – 100% offset