Just think what could happen, the market drops, you lose your job, the lender forcloses on your property, but there is a shortfall of, say $50,000. The bank will also have a mortgage over the proeprty of your parents. This means they could foreclose on their property too.

Maybe a slim chance of this happening, but you never know.

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This doesn’t seem to be a owner builder type situation. Carl needs a loan for a straight out purchase which he will renovate. The trouble is his income. Carl, you would need around $55,000 pa income assuming no other debts and $350 rental income, to service something like this.

Maybe the best way around this is as Josh suggests, get someone else involved with you.

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Yes it can. But if not done properly the ATO can disallow the deductibility of interest.

Have a look at:
TR 2002-18 – “Income tax: home loan unit trust arrangement”

Available from:
http://law.ato.gov.au/pdf/tr02-018.pdf

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Better seek some good advice. Companies are generally not favoured for holding property as they do not get the 50% CGT concession. Look into Trusts.

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I think the LVR would depend on the shares. Some shares are considered more stable that others. Probably 70% LVR would be the max, so aim a bit lower, maybe 50% to help you not worry too much about margin calls.

Tax deductibility would depend on the use of the funds, not the security.

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Investor, many banks just do drive bys. These can be good in some ocaisions – if the place is a dump inside, but nice outside.

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Not sure about NZ, but with some lenders here, you can insist on a full valuation so they actually have to go inside.

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Yes, try to use the major banks firstly, if you have no choice then go for the smaller ones. It is not nice to have these fees hanging over you head, just in case you need to refinance in a few years.

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You can always mortgage the land at a later date. Maybe consider these:
– Sell shares now, pay CGT
– Sell shares now, buy proeprty and reborrow for shares = deductible interest
– keep shares and get a margin loan agaist them
etc

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Generally 7-8% seems the norm. maybe less if you have a few properties with the one agent. But in WA things seem different, prices are much higher there, and they have invented many additional charges.

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