I must say I cannot really understand the ‘multiplication by division’ theory. I am inclined to say the selling costs and purchase costs on the new one will not make it worthwhile – you might as well just keep the property and increase the loan.

Maybe the only time I would do it is if you think the property has had some quick growth and would be in a long period of no growth while other areas are still growing.

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Yes, should be possible. Most lenders would allow this.

But, why cross collateralise? Why not increase the loan on the investment property and lend that money to the trust to use as deposit.

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I’d bet on the cheaper one because of the ripple effect. People that want to live in the expensive suburb will tend to drift over to the cheaper one pushing up prices – hopefully.

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Here is an interesting case.
The Trustees of the Property of John Daniel Cummins, A Bankrupt v Cummins [2006] HCA 6

A barrister transferred his half of the house to his wife in 1987, he became bankrupt in 2000. The bankruptcy trustee succeeded in undoing this transaction.

see: http://www.tresscox.com.au/resources/resource.asp?id=120

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Stuart

Thats the new ‘product’ (called 500 plus), $500,000+ with LMI paid by RAMS with an interest rate of 7.23%. The standard No Doc is the No Doc 80 which can be under. Got one of these approved the other day for about $360,000 at 80% LVR.

At the moment RAMS are bring out new products every week and it is hard to keep up

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Hi Ficus

Be very careful with something like this. The rental guarrantees are meaning less if the company ends – which many do.

The potential capital growth may be very limited as these things are hard to sell, and harder to finance than the average unit.

Also watch out for management costs blowing out and for restrictions on what you can and cannot do.

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I just refinanced someone out of MB into the ANZ as they wanted a LOC, and MB were not willing to change things, or it was too hard for them.

Depending on the amounts I think you will find ANZ or St George to be good for LOCs

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You could do that, but the extra interest incurred would not be deductible. Why? because you are not borrowing, you are taking from a savings account.

In this case, it would be best to approach your lender and ask for a separate loan securred against your home, and use this money as deposit for the new property.

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A possible solution is not to get married, and not to sleep with your ‘spouse’!

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Ian, I think you are right about the 50% discount.

I think that if you are doing this as a business you could possibly class the gain as income (rather than a CG).

It may also be possible to keep the gain as a capital gain.

Whichever is prefereable may depend on whether you have losses from previous years.

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