Yes, not a good idea. Too many costs, just look at accessing the equity and use that for further investments. Look at getting a IO loan on both the investment portion and your non deductible portions – with a 100% offset account on this.

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The trouble with most No docs is that they are mortgage insured. There are only a few mortgage insurance companies that all the lenders use, so if you strike out at one place, you will probably strike out at another lender using the same mortgage insurer.

There is a new company that has some No Docs without mortgage insurance at all. Centra Capital. I enquired hte other day about a property in WA, and they could have done up to 65% LVR (lower than usual because of the location). Rates were around 7.88% from memory.

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Just because one property dropped by 43% doesn’t mean the property market has dropped.

You do not know the background to this property. It could have had a granny flat demolished, bikies move in next door or anything similar. The original price could have been inflated, they could have stacked the contract, it could have been transferred between family members etc. From memory, this was also a mortgagee in possession sale at auction, so it may have just been an unlucky day for the vendor too.

Just tonight on the news they were saying Sydney prices were rising still.

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Josh is porbably correct, but some people are just own nothing control nothing types of people. So suing them would be an even bigger waste of time. You could get a judgement, spend thousands on legal fees, and then get nothing for it.

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Hi, It is not illegal to borrow money from yourself, just impossible. (I am not an accountant, so maybe wrong).

Just the other day I asked myself to lend myself $20, but I said I couldn’t be trusted, I then got angry with myself for not trusting myself. In the end, I got the $20.

Maybe your accountant is suggesting you just take some of the profits from the business and put them in property?

BTW, does your business have a separate tax return from yourself?

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Trusts do not effect borrowing ability at all.

When you set up a trust, the trustee, or the director of the company that is trustee actually borrows or guarrantees the loan. So it will all come down to the credit worthiness of this person.

Once the trust has beens established for a while the assets and incomes will help, but you would have had this anyway if buying in your own name.

Trusts add flexibility though. If you are director of the trustee, and you get a bad credit rating (eg due to credit card default etc), you can resign as director and someone else can go in your place. This person can then guarrantee the loans.

So I don’t know what Steve would be referring to here.

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I cannot see anything wrong with accountants and FPs being in the same firm. might work out cheaper that way anyway.

I don’t think there are any problems with accountants and trusts either. Accountants study different aspects of trust to solicitors, but I guess it all depends on the person’s experience and additional training. Some accountants know more about trust law that solicitors.

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Yes.

One of my Discretionary trust deed’s states that a charity is a beneficiary.

Charity is defined very broadly in the deed too, including

a) any body, corporation or unincorporated association being a church, religious institution, charity or benevolent institution and gift deductible bodies and any charitable purpose

b) the trustee (in its capacity as such) of any trust or settlement established for charitable or benevolent purpose

c) any charitable trust, society, authority, institution, church, religious order, person, entity which at the time of distribution of the income of the trust is exempt from income tax or at the time a tax deduction would be available for a monetary gift to that entity or person.

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Hi Sally if your business is a sole trader, then you are the business. You cannot really borrow money from yourself.

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Hi George

Thanks for sharing this with us. It just shows what can happen to people – even if careful.

But don’t worry too much. This is probably just a bluff. It is easy to send out a letter to scare someone. Some people would be so worried they pay up.

Just because you have received a letter doesn’t mean that you will be sued. And even if you are sued, what are the chances of them winning? You have set yourself up with a JV contract, drawn up by a solicitor. You have a good start. The other party doesn’t have much to go on. Some alleged promises to make a profit. It won’t stand up in court.

Have they lodged documents at court, like a statement of claim yet? If not, then nothing to worry about (yet). Even if they do, you can file a defence, or even countersue them.

I could go out tomorrow and lodge legal documents to sue you (if I knew your name). You can sue anyone. But that doesn’t mean it will pass the first round at court.

I suggest you relax, and just get some good legal advice.

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