A JP is just witnessing signatures. Which may not amount to much if your contract is fully of holes. (But you will be borrowing their money, so having a contract full of holes is their problem.)

A contract need not be in writing to be enforceable. But it is a good idea to avoid disputes later on. You will need to cover term, security, interest rates etc.

Terryw
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I can’t think of any off the top of my head. How far over $1mil do you need to go? Is it owner occupied or investment?

Certainly LMI companys PMI, Genworth won’t usually go over $1mil, but there are a few more out there, some non insured.
But expect higher rates and exit fees.

Terryw
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Tysonboss,

Its not that simple really. WIth Low Docs you still have to list an income. Often this is in the form of a statutory declaration. If this income is too low to pass the lenders serviceability model, then the loan will be declined. Therefore some people have been known to exagerate their income.

If you declare $50,000 in your tax return, but tell the bank you make $100,000 taxable income, then the ATO could get hold of this declaration and issue you with an amended notice of assessment to make you pay tax on the other $50,000. It would be up to you to prove you didn’t make this sort of money.
It is an offence to make a false statutory declaration.

That’s the theory anyway. I am not sure if this has ever happened to anyone, but know my accountant mates formerly of the ATO refuse to use Low Docs.

Terryw
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No lender in Australia will lend for property overseas with the exeption of property in NZ. You need to use a lender based in the country you wish to purchase in, or use a LOC secured on an AUstralian property.

Terryw
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Hi Marc

May I ask on what basis they charge? ie is it a yearly fee, or a fee per loan or a fee for the fin plan etc?

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LVR = loan to value ratio.
eg $100,000 property with a loan of $80,000 is an LVR of 80% (loan / value)

Terryw
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ATO has done some small auditing of Low Docs in the past, according to their press releases. None of my clients have been audited in this regard. One client did have the child support agency get hold of one of his low doc applications though.

With No Docs you should be safe as nothing is declared. But the ATO could ask how you are servicing a loan of $X with repayments of $Y when you only earn $Z.

Terryw
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IO has the following advantages:
– reduced repayments

This means that you can pay extra off non deductible expenses first, and/or can invest in more investments.

Terryw
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Hello Geoffrey

What are the beneficial ownership provisions you mention?

I always thought deductibility of expenses must be in accordance with the percentage ownership. So if 50/50 husband and wife, then they can only claim 50/50.
There may be a way around this with salary sacrificing, see http://www.bantacs.com.au for more on this.

You don’t give details of the existing loan of the property and also if they are renting now or bought another main residence.

eitherway, I would suggest a 100% offset account. If they have a new home, then the offset should be on the new home loan. If not, then the existing will do.

Since interest on money used for investment purposes can be claimed, then it may be an idea to look at borrowing for all property expenses such as rates, insurances etc. The money that would otherwise have been used to pay this can be diverted to the new home loan, or the offset account.

Terryw
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Hi Lizzy

There have been a few more No Docs advertised recently, I think Tonto/First Mac now have them, but am not sure of the ABN requirements.

Legacy Financial have a 80% True No Doc, unlimited defaults etc, 12.25% tho.

There are also No Docs with Seiza Capital and Centra Capital at up to 80% LVR, but again, I am not sure about the ABN requirements.

I generally use RAMS or Macquarie.

Oh, La Trobe also have a 75% No Doc with a 1 day ABN requirement. Rates are from 8.50%.

Terryw
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