Hi “wilo”

Yes, HDT = Hybrid Discretionary Trust.

This is the only trust that allows ‘negative gearing’.

Terryw
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Thomas,

they have to allow for costs as well – rates, insurances, management fees etc. These are usually around 20% of the rents all up.

And I don’t think lenders actually lend assuming their will be capital growth. They only base the servicability on current incomes. Future LVRs and Rents are not taken into account.

Terryw
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Originally posted by Mortgage Hunter:
Originally posted by Terryw:
Just drive an old bomb, and keep your cashflow clean and borrowing capacity clean.

Terryw
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Terry@discoverhomeloans.com.au
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Thats what I do …

Simon Macks
Residential and Commercial Finance…[Read more]

David

Not really. You would be paying IO on the LOC so you could easily apportion the interest between different properties. eg. if you take $20,000 5 times for 5 different properties then each is attributed 20% of the interest at tax time.

In the end if you don’t mix personal stuff in there you will be able to claim the lot, so getting it wrong…[Read more]

Just drive an old bomb, and keep your cashflow clean and borrowing capacity clean.

Terryw
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Hi Cruisader

The banks fees for release of security is about $300.

So if you have a LOC setup, you could use that for deposits, but if you have already been using the LOC for other non-business purposes, then it would be better to have a separate one.

Once you start using the LOC for business, stop having your wages etc placed in there. Just…[Read more]

Yes, you should not mix business and pleasure. keep the investment loans totally separate from the home loans. Otherwise it will be a tax nightmare.

Terryw
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Yes going guarantor will show on your credit file.

Terryw
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LOC = Line of Credit

You don’t actually need a LOC product, but just a separate loan. Even if your LVR is above 80% it is still possible, but there would be LMI costs.

Terryw
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Hi Thomas

Lenders generally only take into account 70-80% of the rental income, so having a postive cashflow property may not increase your serviceability, but decrease it, depending on how much the rent is.

Whether it is a good investment is a different matter.

Terryw
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Terry@discoverhomeloans.com.au
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Julie

Thats sounds ok then, thanks.

Terryw
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Trusts can be a difficult concept to get y our head around.

A trust is an ‘arrangement’ where someone owns something on behalf of others. A discretionary trust is where the trustee owns an asset for a large class of members called beneficiaries. These beneficiaries usually include various family members.

When the trust makes a profit the trustee…[Read more]

You could always set up a HDT and jsut use it as a DT until you need the negative gearing aspect too.

Terryw
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Mike at http://www.guardianpartners.com.au

Terryw
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Yes, that makes sense. You will still control the property but won’t be paying the mortgage, but will have to pay rent, which should be much lower.

Terryw
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thats correct. your security for the second property should be the second property alone. Don’t use the first property to secure it or = cross coll.

If you use a LOC secured on the first property to raise the deposit it will not be crossed as the title deed for this property is not used to secure the 2nd.

Terryw
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It is interesting talking to ex-bank managers. Some say the banks have a policy to cross collateralise as much property as possible as this reduces the bank’s risk by having more security and ties up the clients making it hard for them to leave the bank.

Terryw
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Yeah, I agree that it sounds alright. Suncorp are not bad, but I haven’t used them for a while. IO with offset sounds like a good idea. Also good on you for negotiating the lower exit fees. Usual discharge fees are around $300.

Terryw
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There have been a lot of similar posts recently with people wanting to sell to access equity.

I cannot see the point in selling one property to buy another? Why not just keep and increase the loan to 90% or even 95% and then use this money as deposits on the next ones.

By selling you are incurring fees and then fees again on the purchase again.…[Read more]

I believe the expenses must be shared in the same % as the ownership of the property.

So if B has no income the deductions may make an overall loss. This loss may be able to be carried forward to future years and it may get larger and larger for many years until the property would be become cashflow positive. Then the income would be offset…[Read more]