Shralper

Sounds like a good plan. You can always refiance the land later on if you decide to keep it.

I have also heard of people buying property using their LOC, waiting a month or so and then getting finance on the property at a value higher than the purchase price by claiming they had made improvements etc. One guy said he got $16,000 extra for just mowing the lawn!

Terryw
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I beleive what Sooshie says in regard to Vic is correct, but have heard this has changed recently.

I haven’t tried it in NSW, but one of my clients was advised by a solicitor that it would be ok if the nominee was your trust/company or a relative.

Terryw
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Hi Sebastian

Pre-payment of interest is only available on Interest Only loans and is only available if they are fixed for 1 year. This way nothing can change. Next June you will get another opportunity to prepay for the following year, or maybe change back to month by month.

Terryw
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They could get a low doc loan whereby they slft declare their income without providing proof. Rates around 7% unless they can prove they are in business and have an ABN.

or

They could get an asset lend whereby they will be lend money purely based on the value of their house. Not many lenders do this these days. The rates are pretty high – around 9%.

or

They could get a seniors loan. This is where a bank lends them money secured on their house and they don’t have to pay anything back. It comes out of their estate when they die. Rates are about 6.5% I think.

The last one may be the best option. Do they have any income?

And watch out about affecting their pension payments (if they get it). There are various rules about income allowable and about gifting etc.

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Sebastian

I am a Sydney based mortgage broker and could help you out!

Terryw
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DJ

yep. most banks offer a discount of around 0.1% to 0.2%. The ATO requires that there be a commercial advantage in pre paying interest – otherwise you would be doing it just for tax advantages.

Terryw
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Hi

Can anyone that has actually guarranteed a loan for a company purchase please verify if it shows on your CRAA or not?

I think it would as the lender does a check on the guarrantor just as like they were a borrower. I hope I am wrong tho!

Terryw
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Hi Honky

How much are you going to purchase it for? Market Value?

1) You could use you house as collatrol and borrow 100%

2) You could borrow some money agains your house (via a redraw or LOC maybe) and use this as deposit on another loan for the new house.

3) You could get the parents to lend you the deposit, and get a loan loan for the remainder.

4) Often these sort of transactions are done at less than market value and it can be structured so that lenders will basically lend you 100% of your purchase price. Gifting can have social security consqences as well so this may be better than 3.

I think 2 or 4 is preferable. All of these scenarios could be done on either a normal loan, or a low doc loan.

However before you do this, have you considered all family planning and taxation issues? It may be wise to leave it in the parents names. There could be considerable tax advantages to do that. If you become owners and it is your second property there is land tax, captal gains tax, stamp duty on the transfer etc.

If the parents held it until they died it could be passed on CGT and stamp duty free (I think). And your cost base would then be the value of the property at the time. And I think you would have 2 years in which you could sell the property CGT free.

Lots of things to consider so I think it would be worthwhile to speak to a GOOD lawyer (hard to find!).

Terryw
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Felicity

What do you mean by
“I’ve been told that because the MI scrutinises the loan very very closely, they insist that guarantors have their credit history marked”

For any loan you apply for, your credit record will be marked (exept some private lenders). Even loans in a company name where you act as guarantor.

I know Steve’s technique, but can’t understand how setting up new structures can overcome this. I think that as you get more properties, normal rules don’t apply and banks will treat you as a business.

Now there are only 2 mortgage insurers left which is making it even harder to get multiple loans. PMI and GE are the 2 and they have policies that limit loans to about $600,000 in total. So maybe $1.2 mil all up is possible if your loans or mortgage insured.

BTW most of the low doc loans are mortgage insured no matter what the LVR. Some that aren’t include St George, ANZ, ING and Suncorp.

Terryw
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Hi Andrew

If you have an extra $50,000 in cash, why don’t you put it off your home loan and then redraw it again to invest. The itnerest on that portion should then be tax deductible – use a split loan if possible to make it clearly separate. That way you reduce your non deductible debt.

If you can buy +vely geared property the rent from this can also help pay off your home loan quicker.

Terryw
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