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You should be able to do Tenants in Common anywhere in Australia.
Terryw
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Hi Ajay
I would be wary too. Anubis has raised a good point. What if you want to sell in 3 years. Your market would be limited to investors only – as you would still have a long lease in place. This could make it harder to sell, meaning you may get a lower price.
If you are only getting market rent, then why pay a 15% management fee. Just because they lay new carpet and paint the place after 9 years would not justify it in my opinion.
Terryw
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Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What exactly is your problem? ie why couldn’t you get an approval for Melbourne? Is it serviceability? Location?
I would suggest you talk to another broker. If you have enough equity in your property, then it may not be much of a problem.
Some questions:
What do you mean by bridging finance for the Melbourne one? Has the bank agreed to lend you the money for this one as long as the Sydney one is to be sold?What is the value now compared to purchase price?
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Ajay
I have heard their management fees are high, and the leases are long so this can be a bit of a turn off to some people.
What sort of rents would you get on a $500,000 proeprty? Is it market rent or aa bit higher?
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hopefully this is a temporary situation. So I wouldn’t be too concerned about renting for a while. Prices probably won’t move mcuh in the next year. Then you can buy the new house.
You probably would not be affected by capital gains tax either. You can rent you house out for up to 6 years and not have to pay CGT if you sell in this period.
It would just be a bit of a hassle having to move twice.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There would probably be licencing issues. The best place to start is to talk to the department of fair trading in yoru state. They can give advice on what licence you need, if needed at all, and general business setup advice as well.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Tax deductibility depends on the purpose in which the funds were used, not the security used.
So if you increase you home loan to buy shares/property the extra interest incurred would be deductible.
The problem lies in determing the extra interest if you have one big loan.
eg. If you have $50,000 owing on the home loan and then borrow another $50,000 for investment, in one big loan when you make your monthly repayment, the ATO may consider you to be paying 50% of each payment off each part of the loan. You will be paying off deductible debt when you should be paying off the home loan first.If the portions are not equal it will be hard to calculate the interest owing on each portion.
So a better option would be to take out a separate loan for the investment, make this interest only, and pay the minimum.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi
An asset loan is where the lender (mainly) looks at the asset and not the person. Often no questions are asked about about employment or assets etc. There are no serviceability issues at all. These are sometimes also referred to as No Docs.
Many people prefer these to Low Docs because with a low doc an income needs to be listed and serviceability must be passed.
The downside with asset loans is the LVR. usually 65% LVR (with rates around 7.55% reducing to 6.80%), though there are some at 70-75% and one I kno of at 85% – but this is short term and has high rates – around 10%.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes I read it last year and agree. It is one of the best books I have read recently. There are a few more books by McGrath which I have on my must read list.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You should be able to get standard loans with most banks. There is only one I know of that discriminates on age.
I once heard a banker just they just did a 30 year loan to an 88 year old woman.
However, to get a loan, you must have deposit and an income to support the repayments – inless you go for an asset loan or no doc loan.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you have don’t have a high income, then there will be a limit on how much you can borrow. Having 2 years financials will help – if they are good.
You have the option of low docs, but these are generally 80% LVR and rates can be higher. One thing you have to watch out for with low docs is that most are mortgage insured, and the two mortgage insurers ahve a maximum exposure level of about $750,000 and $800,000 each. ANd that is not individual loan, but combined loans across all banks. So plan well now.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
No. You will still need to give personal guarrantees, so the lender will rely on your income. If you can’t qualify now, nothing will change by forming a company.
You probably shouldn’t use a company to hold proeprty either. better talk to an accountant before setting any thing up.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi
As far as I know the two main mortgage insurers do not treat wrap refinances as being refinances, so they will only lend on the contract price, not value. Therefore you will probably need at least 20% equity to refinance. Your figures seem to indicate about 50% LVR so you should be right, even for a low doc with a major bank like ANZ.
Most solicitors should be able to hep you. It is just a pruchase really.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Tasman
Yes. you right!. Of course, I meant to write Investment loan. You pay the interest on the investment loan with your LOC.
Sorry to confuse everyone. I will amend the original post.
Terryw
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Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes, why not. But becareful tax wise. if you try to claim the interest on the $40K it won’t be initially deductible until you use it for the investment.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Can’t really be done like that. it may be possible somehow, but would be costly to setup.
look at http://www.chrisbatten.com.au for some info on smsf and proeprty.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I suspect you will be lucky to find a low doc commercial lender at around 70%, let alone a no doc at 80%. Let us know if you do.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I knew it!
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Be very careful. Depending on what state you are in, if you nominate a trust after signing a contract, you may be charged stamp duty twice. A trust can be setup in 5 min, waiting to see the accountant is the long part. Try and get in there early.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There is one bank that I know of that discriminates on age of clients. They generally do not like loans exceeding a persons expected working life – otherwise how will they pay it back!??
I don’t know if they can do this legally, but they must be able to.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
