Rob,

yes i do like LOCs. This was mainly because I used to put all clients to ANZ who do not charge any extra. (but I am getting sick and tired of ANZ lately). Using a term loan instead of a LOC would work fine.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

When applying for finance, lenders will have often a computerised scoring system. You get a point rating for stability of employment, address, number of enquiries for finance etc. This assessses the probability of you defaulting on the loan etc

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

The Hart’s case only referred to a specific situation. There are still many people in property and business who capitalise interest legally. If you do this, your tax deductions rise, while you non deductible debts decrease faster, saving money.

My example with the rates was referring to rates on an investment property. Of course, if their loan…[Read more]

That’s the first I heard of it!

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

In Sydney, the ideal time to sell would have been about 12 months ago. Valuations are comming in low these days, eg $600,000 last year, $500,000 now. It seems to be pretty flat now, but should pick up again. Just wait for the pickup to occur.

Now is probably the ideal time to buy.

Terryw
Discover Home Loans
Mortgage Broker
North…[Read more]

Originally posted by The Mortgage Adviser:
You would never make a profit on the rent if you set the loan up as interest only and increase it for further investments as required.

Robert Bou-Hamdan
Mortgage Adviser

http://www.mortgagepackaging.com.au

Investor Links

The trust would have to charge you market rent. Even if you had an IO loan, the rents…[Read more]

According to the Tax Payer’s guide (published every year), there is no need to claim rent received from flatmates etc as it is not taxable income. A friend also told me the ATO also said the same thing to her.

But you could declare the income and then claim a perscentage of the costs. If it was a two bedroom place, and one room was rented out, I…[Read more]

Rob I just read your article and agree that often offset accounts are better.

But in one of your examples, you had the clients drawing down a loan at settlement and then putting the money in the offset account. The net interest bill will be initially nil, as they are balance. But if money is taken out for say a deposit on an investment proeprty,…[Read more]

Say your mum had a $500,000 LOC. She could lend you $20,000 for the deposit on a $100,000 property, and maybe another $4000 for costs.

You could then get your own loan of $80,000 for the remainder.

Hopefully in a short period, the property would increase in value to say $130,000 and you could then increase your loan to 80% of this or 104,000.…[Read more]

Sounds like you do not understand what you have done.

Have you sold a house on an installment contract? If so, they payout figure is the amount remaining on their loan to you, with any exit fees etc (if in your contract) added on top.

Have you been issuing them statements? If so you should know how to do it. If not, you should contact the person…[Read more]

Rob

Capitalising interest can help you pay off a home loan faster! Despite what you may think, if done properly interest is claimable.

There may also be times when people have no choice but to skip a payment, so it can come in handy.

And what about this scenario:
A person has a home loan with an offset and a LOC securred against the home loan.…[Read more]

There was a list on the Vendor Finance Association website a few years ago- don’t know if it is still there.

If not, maybe Tony C could recomend someone.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

Please speak to an accountant before you sign. once you sign it may be too late to change.

I would suggest a company be out of the question, and you should look at a discretionary trust or a hybrid trust if you need to negative gear.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

Now may not be the ideal time to sell, as the market is flat. What about buying a place you would like to live in now, and rent it out for a while, claim some deductions etc, then sell later on.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

You can use a trust to own your personal home, but it is complicated and you have to be careful. The ATO have a ruling out about renting from your own unit trust, and they don’t like it!

You could possibly make short term tax savings, but long term owning your home in a trust is not beneficial because:
– maybe up for land tax (not in QLD…[Read more]

Hi RObert

Thanks for clarifying. In my case I have no non deductible debt, so you response confused me.

I generally prefer LOCs because of the ease of use and the fact that you can easily capitalise the interest. But these do usually have a higher interest rate (ANZ is one that doesn’t).

Some lenders don’t have a 100% offset, but offer free…[Read more]

Hello Robert

I am not sure what you are trying to say here.

What I said is correct.

If you have money in an offset account and withdraw that money, the extra interest incurred on the loan would only be deductible if the loan was already for investment or business. There would be no accounting problems as the loans/accounts are totally…[Read more]

Yes, they will have to declare the income. But hopefully they would give it back to you (or you wouldn’t give it to them).

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

Sorry, I meant that CGT may be payable on the sale of your shares.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au

Yes.

The best way is for them to get a LOC and loan you the deposits and you get 80% loans for the remainder in your own name.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Terry@discoverhl.com.au