[WyethMember@wyethJoin Date: 2010Post Count: 9]

February 5, 2010 - 12:00 am

Your monthly repayment consists of two components.

Component 1: This is the principal part of the payment. The principal is the portion of the loan that directly reduces the original amount you borrow.

Component 2: his portion pays of the interest that has been added to your loan.

The ratio is which these components are paid off will vary with the life of the loan. At the start your $250 monthly repayment will be reducing almost all (if not 100%) of the interest applied to the loan. So, theoretically you could take a loan out, pay the first few repayments then try and cancel the the loan but still have to pay the full amount you borrowed.

As the loan period progresses the percentage of your monthly payment that pays off the original amount you borrowed (the principal) will increase. It is worked like this so that the banks get most of their interest first and if you cancel early you are still left with paying out the principal.

Say you had a $10,000 loan
Interest is $2,500
Total payable $12,500
Repayments are $250/month

The large majority of your monthly payments at the start of the loan go to decreasing the $2,500 portion of the loan. As the loan continues (and the interest is closer to being paid off) a larger portion of your $250 monthly payments is used to pay off the $10,000 portion of the loan.
You need to ensure that when making extra payments the money is paying off the $10,000 portion and not the $2500 interest portion.

I hope this makes sense, good luck!

*All values are used are for demonstration purposes only*

[WyethMember@wyethJoin Date: 2010Post Count: 9]

February 3, 2010 - 11:29 pm

Thanks Number 8, I’ll get some info together and give you guys a call.

Having re-read my last post it’s pretty unclear, I was after the accountant for tax purposes really and then to chat to a FA with regards to the other issues.

I see from your site that seem to cover these aspects. Where abouts are you based?

[WyethMember@wyethJoin Date: 2010Post Count: 9]

January 27, 2010 - 7:21 am

Can anyone recommend a good accountant in the Newcastle or Port Stephens area? I need to have a chat about my plans and get some advice additional assistance with structuring of loans.

[WyethMember@wyethJoin Date: 2010Post Count: 9]

January 27, 2010 - 12:34 am

You make some good points, but the population is still growing, and they have to live somewhere. there is only so long you can stay with your parents before you have to rent or buy.

Maybe the future growth will be in CF+ properties and less capital growth, either way, there will be a market somewhere, it’s just finding it.

[WyethMember@wyethJoin Date: 2010Post Count: 9]

January 26, 2010 - 10:30 am

I’d considered how worthwhile these seminars are and how to evaluate which ones will be beneficial and which ones are selling snake oil. I’ve learned from experience over the years that expensive doesn’t mean better, and on that basis I’d consider paying $50 to go to a seminar and learn the basics (which I believe I’m gripping having researched the internet and just ordered my first book).

What I will likely do is read up as best I can and then get a sanity check/extra advice from a couple of different property based financial planners and make a judgement from there. I hope I don’t fall into the idiot category as I may shortly loose a lot of money!

I think badgers statement was a little pointless and not required. That said, I did have a laugh reading the responses and his evaluation the other guys website was gold. Why bother having a website if it reflects poorly on your company and you’re not expecting to get business out of it. That doesn’t sound like a good investment to me, which is worrying considering the line of business he’s in

[WyethMember@wyethJoin Date: 2010Post Count: 9]

January 26, 2010 - 8:53 am

TCLinvestments wrote:

My Goodness, all these wealthy people not spending their cash!!
It sorta makes me feel guilty about buying a new car back in May 09, 50% rebate encouraged me to upgrade. Toytoa camry, touring, cost me 30k.

Yes, a car's purpose is to get from point A to point B, and yes, the money is better spent on investing and apreciating assets like property and shares etc. But i believe this is why i have embarked on this journey in the first place. I Invest to create wealth, i want wealth to enjoy the better things in life. and one day….  in the not too distant future…… when my IPs will pay for BMW, i will have one of those.

I have a similar opinion to yourself, it’s not all about making the money, if you can’t spend some of it what’s the point? I am a car fan though so wouldn’t begrudge spending a little extra to get something like. I also drive almost 2 hours a day to work and back, I want to do it in something comfortable and that I like.

I bought a TRD Aurion 3500S as it ticked the boxes at the time. Good towing capacity, great fuel economy, different to look at and spacious. I also have 3 dirt bikes but they are all going in order for me to save money for my first investment. Geez this saving business is painful!

[WyethMember@wyethJoin Date: 2010Post Count: 9]

January 26, 2010 - 8:37 am

William – I’m new to all this and have been looking at the market myself to try and familiarize myself with what’s available and I’ve come to the same conclusion as you…..well almost.

It appears that you’ve read Steve’s book and have had a quick look on the internet and amazingly didn’t find a property advertised that will actually make you money without having to do anything. If it was as easy as that everyone would be doing it. I think that a lot of work, time and investigation and a bit of luck is required to get a true CF+ property, it’s not something flicking through 2 pages of Domain.com will get you.

The current market with the low interest rate will certainly be making this situation worse, however, it isn’t likely to stay like that forever, so maybe a change in your short term strategy is required

Steve