There are private lenders that do not check your CRAA at all. They don’t even care about it. They lend purely on the valuation. BUT (and that’s a big BUT) the interest rates are around 12%.

So if you are willing to pay for it and can still come up with the deposits, you can get unlimited finance!

Terryw
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Trying

You could use a cashbond to help you service the loan, but this is just like borrowing to pay the interest repayments. It is not nessecarily a bad idea, as long as your property is growing faster than you are using the equity.

Really there is only one way to service your loan, and that is to earn more income. This can come from a wage or from rent from other cashflow +ve properties etc.

And the average bank would not lend you money based soley on the rent if you had no other income. You would be what they term too rental reliant.

Terryw
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Yes I think this is a very good strategy. It is far better to withdraw some equity to live on then to sell a property. Once you have sold the property it can’t grow any more (for you anyway).

If you have $1,000,000 worth of property grwoing at 5% per year = $50,000 pa growth. If you just take, say, 80% of this growth and leave a buffer, you should be right, as next year it will have grown another $50K or so.

You can still borrow without an income using low doc loans, or asset lends.

Terryw
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Skyeboy

You will lose any further capital growth by selling an option on your house or buy wrapping it.

You could make some money by doing Mezzanine finance. Maybe a better option is to use the equity to buy another property which you could wrap?

Terryw
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That is what I do. I have an agent in Vic that sources property for me. He doesn’t have a web address tho. I better not give out his phone numbers on this forum without his permission. you can email me if you like and I will pass your details on.

Terryw
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Jay Cee

What about borrowing the deposits you need from family/friends and offering them a good interest rate (15%?). You should still be able to make a good profit.

Terryw
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I’ve been to the NAVRA course (late 2001). the course is basically half shares and half property.

His property approach is very different to most people on this forum. He is very in favour of high growth property and advises people to go for the more expensive properties that will have higher growth rates. He offers a free ‘financial consultation’ after the course. I went and he advised me to get out of my wraps as soon as possible! He is not impressed with this strategy to say the least.

The cashbond strategy is his main claim to fame. It is a good strategy, but he charges a price to set it all up (of course), there will also be a loss as the annuity will get you about 5% pa, but will cost you about 6% to use your money from your LOC. He has a tax ruling allowing the loss to be claimed as a deduction against other income as the purpose of teh annuity is to increase borrowing capacity. I don’t know if I would use it, but for many people it appears to work.

It is worth going to the course as it is so cheap (about $300 or less).

Terryw
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Yep. It appears that every time you guarrantee a loan the bank will do a CRAA check – hence an enqiury will be listed.

Terryw
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Here is a link to the story on Today Tonight
http://www.todaytonight.com.au/stories/592932.html

Terryw
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David

My company (the one I work for that is) also has this product, the 100% lend.

There are other conditions on this loan as well:
• Must be their only property
• Must be less than $300,000 for Sydney property, $250,000 in Melb $200,000 elsewhere
• Must have 3% savings (genuine savings over 6 months)
• LMI is 2.6% of purchase price!

The LMI company is taking all the risk, and is charging accordingly.

Terryw
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