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What state are you in?
You can usually get this information from the land titles office for about $5 over the internet.
Terryw
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Here is a link to the story on Today Tonight
http://www.todaytonight.com.au/stories/592932.htmlTerryw
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Grace
If the property has risen in value, you can apply for a release of security. This would remove any cross collateralisation and should only cost about $300 or so plus the cost of a valuation.
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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It does happen.
I currently have a client who has gone unconditional on a $915,000 purchase. AND he wants a low doc!
Terryw
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I have heard the same. Banks must be seen as getting at least market value for the properties they foreclose on.
But you could still buy properties from people that are about to be foreclosen upon. You just have to find them
Terryw
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Hi Richmond
Basically what Michael says is (theoretically) correct, but he hasn’t taken into consideration closing costs. Assuming 5%, then the figure would come down to $1,320,000.
But you still must meet serviceability requirements, ie you must have the income to support the loan repayments.
Putting your figures into one of the bank calculators, I get a maximum borrowing capacity of $449,000 – without including ny potential rent from new purchases. Assuming you were to get a 5% rental yield this figure would jump to approx $685,000.
[I have assumed you get $370 pw rent for IP one, no children, no credit cards, and repayments for your current loans are $838/month and $1000 per month).
I understand why you don’t want to use the cash in your offset account. Mayabe you could, just get another split on that loan up to 80% LVR and use money from that as deposits, and keep the $55K in the offset. You could also increase the other loan up to 80% as well.
Down the track you can consider using low doc loans. These loans generally have a higher interest rate, but there is one low doc product at normal rates (6.07%) at 80% LVR. But you must be self employed for at least 3 years to qualify. This must be proved by an ABN registration. Therefore it may be wise to register for an ABN now in anticipation (costs nothing).
Don’t really know on the LMI angle. Some like to avoid it by paying bigger deposits, others like to put as little money into a deal as possible. I personally went for the later approach – I tried for as many 95% loans as I could get.
I think if you are going to pay LMI at some stage it would be better doing it sooner rather than later as the LMI crowd have stricter qualifying requirements, so if you wait till you do a few properties and then apply for a 95% loan, they may say someting like you are too rental reliant etc -Even tho you may still have the income to qualify for the loan.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi all
I agree with Gus. Cross collateralisation is the same as cross securitisation and means, basically, using 2 (or more) securities for the one loan. This is not such a good idea as the bank often has more security than it needs, and it makes things messy if you want to refinance or sell one of the properties later. I better way may be to use a LOC on one property and to withdraw the deposit for the next property from this account.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Michael
I have no experience (as a mortgage broker) with getting loans for clients with Hybrid Trusts soI don’t really know how banks will treat them. I have had client purchase property thru a discretionary trust and the bank always asks for a copy of the trust deed which they (supposedly) have their legal people scrutinise to make sure the trust is allowed to borrow (etc). (They probably don’t even look it!)
As you are going to use Dale, you can’t really go wrong. People must be getting finance approved using the trusts or they wouldn’t be using them.
Michael, it looks like you are becoming a bit of a trust expert!
Terryw
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Michael
2 points:
1) I have heard it is harder to get banks to accept hybrid trusts.
2) I have also heard Dale GG mention that Hybrids may not be as safe from a asset protection point of view.Terryw
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Stuart
I can guess who you are talking about and agree with you on that one!
Terryw
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I don’t think you would need a tenant in place as long as you had the property up for rent. ie you were trying to find a tenant.
Terryw
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One more thing on hybrids. I have heard that banks do not like lending to Hybrid trusts, so it may be harder to get finance. Although I am a mortgage broker, I have no experience in this area. Could any other brokers out there please comment? Or anyone with a Hybrid Trust?
Terryw
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Michael
I have the book in front of me now.
He has lots of nice diagrams explaning actual case studies. It is actually not that difficult a book, expained clearly. However most of it is the same old stuff.
A few good bits include:
-The negative gearing time bomb (how buying an ip in the highest income earners name backfires if it is sold and CGT is payable).
-The refinacing principle (converting equity to debt and claiming the interest payments on the debt as a tax deduction regardless of its use)
-Superannution structures
-family successionIncidently, he has a section on PPOR and states on page 15, that it is his opinion the final family residence should not be ourchased in a trust structure. He also lists advantages and disadvantages.
The main part of the book is only 73 pages, and the rest of it deals with analysis of various taxation rulings (pages 73-134).
It then finshes off with an example of how you could save over $100,00 by purchasing an IP in a Trust (Hybrid Discretionary) rather than personal names.
Overall I think it would be a good purchase if you are serious at setting up a trust structure or increasing your knowledge in this area.
Terryw
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David
It is calculated as 80% of value less current loans.
eg in your example, total value is $330,000. 80% of this is $264,000. However, your current loans are $195,000, so you should be able to borrow another $69,000 ($264,000 – $195,000).
BTW, You will also still have to demonstrate serviceability to qualify.
Terryw
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You could sell your half to your spouse (if it was purchase in two names). Get a loan to do this and the proceeds would be put off your new home loan.
Or you could do as Michael and Kaye are doing and sell your house to your Trust. (see their post today).
Or
Steve Navra’s technique. It goes something like this:
You get a annuity with the purpose of increasing your borrowing capacity-together with a tax ruling. The money from the annuity comes from a LOC secured against the house. The income from the annuity is kept in a 100% offset account linked to your new home loan until you decide what to invest in. This is in effect a way of transferring the money to your new home loan.
I think his site is http://www.navrainvest.com.auTerryw
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Michael
I have purchased this booklet. It is fairly technical and sometimes difficult to understand. It has been a while since I read it, so will dig it out tonight and skim thru it again.
From memory half of the book was just print outs of various tax rulings (which are avaliable on the internet if you know where to look).
Terryw
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Steve
I think the point to the hybrid is to make the losses distributable. I am no accountant, but I think that discretionary trusts cannot distribute losses, but unit trusts can. A Hybrid is a combination of these two trust types.
There are apparently Hybrid Unit trusts and Hybrid Discretionary trusts. Both are slightly different, but I don’t know how they differ. There are actually sample trust deeds on Chris Batten’s site at http://www.chrisbatten.com.au
Terryw
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Nick
This is just like a lease option, but they tenant only gets a portion of the equity.
From the example, it doesn’t appear to be too good for the tenant, so I don’t know if anyone would be willing to pay an extra $300 per week for this one.
There was one person offering something like this on new units in Parramatta a while ago. I think the Hanna brothers are also teaching this technique in their seminars too.
Terryw
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You don’t say what CBD?
I purchased a property off the plan and have just recinded the contract because it hadn’t gone up as expected (Melbourne).
I think now is probably not the time to be buying off the plan in Sydney or Melbourne.
Terryw
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