Hello all, I am hoping someone can shed some light on this issue.
Who is using cash bonds, what does it all mean???? and there is more….. what is it all about Steve Navara, sounds extremely high risk…. but would like to know more and try to work this out. thanx
Hi Marisa,
I am not using cashbonds, but they are another bullet I have in the breach should they ever be needed.
A cashbond suits people with high equity levels but who haven’t the income to service additional borrowings.
For example an investor with $150K in unuseable equity can buy a cashbond of 5years annuity @ $30K/annum + interest.
The $30K+/annum then gets included as income and improves a borrowers serviceability allowing the investor to borrow and buy/invest again.
But of course the income from the cashbond is generally less than the interest charged to buy the cashbond.
However the benefit comes in the increased capacity to leverage the equity and income that was otherwise ‘dead’.
The proliferation of no doc/low doc loans means that investors can, generally, secure the additional loans without the need for cashbonds. The non-conforming lenders certainly remove some of the need for people to use a cashbond.
Please note that it is a very laymans description of a cashbond and I profess to only knowing the rudiments of the process and not the detail. For me the details will/may come later if/when required.
As for risk – well some people think crossing a road is risky.
Derek
[email protected]
0409 882 958
Property investment advice and researched property in quality locations available.Cashbonds are just Steve Navra’s term for an annuity. You pay money to a bank and they give you back this money over a period and pay interest. this money can then sometimes be called ‘income’ on you loan application.
eg. you have $100,000. You buy an annuity for this amount over 5 years. The bank will pay you $20,000 per year plus interest, usually it is paid monthly. This extra $22,000 or so received annually is actually mostly your money being returned with a little bit of interest.
However with some banks the whole lot can be claimed as income for loan purposes. Thus increasing borrowing power.
But there are costs for this to happen. Annuities will usually pay a low interest rate – maybe 5%. So if you are getting the money form your LOC and paying 7%, there will be a loss. This may or may not be claimable.
Then there is the setup fee – often up to 3% of the annuity amount.
These days low docs may be a simpler option, as Derek suggested.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Derek and Terry thanks for your help.
Cheers, MarisaHi Marisa..Did you ever follow this up?
I’ve been looking at Steve NAVRAS posts a lot and will definetly go to his upcoming Perth Seminar
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi Red
Wow, I posted this in Feb, lots happened since then. I think I am actually a different person since posting that one.I spoke to Steve about 5 months back and he sent me spread sheet/information. At that point in time there was no proposed seminar for Perth.
I have read about this Seminar on SS and was planning to contact his office to get details.
I am sure there will be many formites going to this.
Do you have any specific details?
Thanx
MSteve Navra is a good guy and I have done his seminar and recommend it. The fee pretty well covers his costs.
The cashbond is exactly as described but with the easing of NODOC and LODOC rules it is one avenue among many to get around lower serviceability problems.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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