DeanCollins wrote:

Hi Terry,
Sure….but when the bank that secures your $400,000 loan says….sorry but we aren’t lending you any more money on a property that they already have a mortgage on….? then what?
eg you are in the same situation as I am for the St George Portfolio loan…..
Surely you aren’t suggesting a secondary mortgage right? eg a bank to take the second mortgage on the additional equity? I didn’t think that they even had those in Australia.

In that case you have 2 options:
1. stay put, or
2. take your $400k loan and refinance with a lender that will lend.

When cross collateralised you won’t have the second option.

Bank staff are often involved with deception, or fraud. Just make sure you try to cover yourself by getting evidence in case this non disclosure blows up.

Can u not just change products?

Pete

Not many people can keep on buying properties these days. Even with high incomes. I had a client the other day on $250k with 5 properties with 50% LVR. I though serviceability should be fine for another, but after checking it was very tight. We were just able to squeeze in one more.

You will probably tap out very soon.

Do you mean you have a loan of $266,000 in total? If so that is a good LVR. You would almost be debt free taking into account your cash.

What about your home where you live – renting or paid off?

It is probably better not to use your cash as deposits but to borrow the deposits – you have plenty of equity it seems

You have basically got 3 options
1. decrease expenses
2. increase income
3. Do both

Sounds obvious!
Check that your rate on the loan is as low as possible.
Are yo claiming all deductions?
Depreciation schedule in place? Travel? Borrowing costs
Debt recycling strategy in place?
Borrowing to pay costs?
Is capitalising interest or borrowing to pay interest an option (get tax advice)
How can you increase your wages
Increase rents?

There are also some tax and legal reasons not to buy property jointly.

You should seek legal advice as trusts are complex legal relationships. you can find free deeds online, but the deed is only half the story. the accountant will only buy a template off a lawyer anyway – but they cannot give advice about how to structure the trustee, who should be the appointor, what happens when someone dies, goes insane or disappears etc.

get it wrong and it will cost you a fortune.

You need to seek legal advice on this. Speak to a SMSF lawyer

Strictly speaking one tenant in common could mortgage their share of the property and the SMSF share be unencumbered and this could meet SIS Act rules. But you wouldn’t find a lender out there willing to lend on this basis.

Another way to do it would be for your friend to borrow against other property.

perhaps if the ownership is partitioned, but you would need good legal advice on this.

The property couldn’t be mortgaged.