Forum Replies Created
Hi Ben
You could refinance now, but beware of exit fees and Application fees for the new loans. If you just want to use the extra equity you could just approach your current bank asking for an increase. Also beware that the bank valuation may not come in as high as you had hoped.
What was the LVR when you purchased? You can generally only refinance to 90% of the value (tho one lender will do 95% -with slightly higher rates). How much you can get out will depend on serviceability as well.
Are the properties x-collaterlised? If not you could refinace one at a time?
what interest rate are you paying now?
Terryw
(Mortgage Broker)Terryw
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go for at least 20%
Terryw
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Does your solicitor want you to sell your current house to a company? or the new house to be purchased by the company?
I would avoid using a company in either situation beacuse of the CGT issues. A 50% discount could be a lot of money.
If buying a new house, I would suggest just buying it thru a trust. This way when you sell it you can get the 50% discount and then diburse the capital gain as you please (between you, spouse, children, grandparents, company etc).
If referring to your current house, I would just leave as it is. Stamp duty etc may make it not worth it. Then if you move back into in future you will have to pay rent to your company or trust.
Yes companies must pay stamp duty and I beleive that it is the same rate as for individuals.
ps. I don’t know what the hell i am talking about!
Terryw
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Peter
It generally takes about 3 days, but with properties in outer areas it can take a lot longer. In the city they use big firms that are on the ball, but in the country they have sometimes just one company to choose from.
I have had the experience where the bank ordered a valuation for a property and the valuer went to the wrong state! (town with same name) It was the banks fault as they ordered it.
My advice is to use a broker as brokers can talk directly with the valuer (most of the time).
Terryw
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Hi Leigh
It certainly would work as long as you could demonstrate serviceabilty. There is no fixed time period you must wait and you could do it just after settlement if you changed banks. If you wanted to stay with the same bank, then I suspect they would want you to wait a while (But have not had any clients do this before). You have to consider application fees and exit fees etc as well.
Terryw
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Steve
I beleive that you would not need a RE licence if buying and selling options as you would have an equitable interest in the property via ownership of the option.
ps. However, I am not qualified to speak on this matter!
Regards
Terryw
Terryw
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Thanks everyone for your replies.
Since writing the post I have rang around to a number of debt collection agencies, however, all only want to deal in volume accounts. ie they don’t want to do a little one off collection. My solicitor has also said it is probably not worth worrying about due to the small amount.
Terryw
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Hi Stonewall
I know what your talking about and you don’t really need a reason. You could put an amount back at settlement if the property settles on such and such a date.
Becareful, sometimes you can be delayed and it may go overtime and you can lose the discount.
Terryw
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Gerard
With most Low Doc loans you still have to list your income, but they don’t verify that income. You still must qualify. ie your income must be high enough to service the loan.
Some banks require an ABN for 2 years as proof that you are self employed. And they check the ABN on the ATO web site to see when it was issued.
Others require that you are self employed but don’t ask for proof. Others accept PAYG as well.
The best (cheapest?) low doc loan is Suncorp. Suncorp allow low doc on all of their products at normal interest rates. So you could get a 6.07% low doc. But it pretty hard to qualify. They require that you have had an ABN for 2 years and you must already have at least $250,000 in equity which you have to prove etc.
Other lenders start around 6.55% for a 80% LVR low doc.
Hope this helps
Terryw
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Ozbroker/Dynamite
That’s is right. Combank low doc loans are all mortgage insured with GE and they have a strict postcode list. You also pay a 1% premium on interest rates with Combank Low Doc. there are much better products available, but most are in fact mortgage insured-this includes all loans not just those over 80% lvrs.
Terryw
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Well put Nathan!
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I beleive you won’t have to pay any CGT because of the 6 year rule. (I have done this, rented out my home, sold it and paid no tax). But I beleive that you can only have one PPOR at a time. So you may have to pay CGT on the new home if you ever sell it. But the period for caluation will only be the short time that you had this and the other property.
ps I’m no accountant.
Terryw
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I know someone that did the course. $15K personal loan. 2years later still has the loan which makes it hard to qualifiy for a housing loan!!!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Nathan
Some more thoughts with lease options:
1) it is also easier to withdraw any increase in equity.
2) There may be a greater chance for the tenants to just walk away from the deal because they don’t ‘own’ the property.
3) There may be a greater chance of the tenants cashing you out if they can get the FHOG down the track.Terry
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Here is another wrap lender!
I am a mortgage broker in Sydney and did some training with ING last week. The trainer stated that they are willing to lend for wraps. However I have heard from other banks that it is the Lenders Mortgage Insurance companies that are the problems in that they won’t approve loans for wraps.I think it is much easier if you use a lease option instead of an installment contract. Then you have no problems with disclosure.
Terry Waugh
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Jarrod
You need to get your solicitor to draw up an option contract. Just adding and/or nominee won’t do becuase you will be required to settle on the property if you do not find someone. WIth an option agreement you have the right but not the obligation to purchase the property.
Also with an and/or nominee clause you cannot nominate someone that you find after signing (in Vic). You have to have an existing agreement in place before you sign or double stamp duty. I think!
Regards
Terry
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Jarrod
An option sounds good. I don’t think you will have any licencing problems with an option because if an option is purchased you will have an equitible interest in the property. It is like selling your own property.
Terry
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Bruce
I’ve done the course and Felicity’s explanation seems to be correct.
You basically buy an annuity and the money recieved back (both the principle and interest component) is classed as income with some banks.
With Felicity’s example, the $20,000 plus interest per year (say approx $21,000 per year) is simply added to your income for serviceability purposes. If you had a salary of $50,000 per year and $100,000 in a loc, you could buy a annuity and your income would then be $71,000 for the bank’s serviceability calculations. This enables you to borrow much more
You would make a small loss, but this is tax deductible as the purpose was to income your borrowing capacity for investing.
It is a bit hard to get your head around this at first.
Terry
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Sooshie
You could write the bank a letter asking for the ‘payout figure’ as you are changing banks.
These days most banks have a retention unit, which handles people wanting to get out. They will be in contact with you as soon as they get the letter, and will do everything possible to keep you with the bank. You can negotiate interest rates, and possibly they will let you increase your limit without LMI so you can use that extra equity.
Terry
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Michael
If you want to transfer after you have already settled, then it will be just like selling the property from yourself to your company. So you will have to pay stamp duty and possibly capital gains tax!
Maybe you could do your first one in your name, see how it goes, and if you decide to continue, then set up your company for your 2nd+ house.
Terry
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