hi all
I have read a lot of post within the last 2 weeks looking at 95, 100, and 106% low doc lending and no doc lending.
These products (very popular as they are)were brought to the market for a particular reason but currently they have filled a market that they were not ment to fill,
Before taking these products
I recommended that you consult a broker that understands both the reason why to use them, and what to use these products for and what your tax position is.
The tax dept can ask for the last 7 years of paperwork (in nsw)for any company or business related persons tax returns and they must reflect your current position.
If your no doc low doc loan isn’t close to that.
Ie no doc I earn 200,000 a year and tax return says 20,000.00. the tax dept has very deep pockets and I can tell you they can become very unfriendly.
106% loans again are for a particular markets.
As I have said on a couple of occasions you need good quality advice and do not get into the ato problem.
I am yet to find a reason why an investor would need a low doc, no doc loan because as an investor your will need at some time to show some docs and why run the risk if you are in business.
Personal yes I see and know the reason. as pauline says please explain.here to help
GR is right lodoc and nodoc loans have a place but often clients assume thats what they need when a good broker can often find a lender to take the deal without paying a higher rate of interest.
This day and age interest rates and conditions on these type of products can vary considerably.
You are required to retain your business records for 7 years in any State of Oz so do think about whether you really need this type of loan before taking the plunge.
Consult with a good independant mortgage broker and make sure you tell him everything about your current position now and what you wish to achieve in the future.
Cheers Richard
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Mmmmm interesting
Are you suggesting some borrowers may be accidently overstating their income?
Maybe these borrowers are hoping to invest successfully and thereby make enough money to repay ATO when caught?
Perhaps an apology would be enough?!?
As a prominent oz cricketer once stated – I am sorry – sorry that I was found out.
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
hi giddo
I have dealt with the ato on a couple of occasions and I would like to think this was the case but (sorry)its not.
I have no problem overstating your income at a bbq or the pub but the view from the ato is simple this, which did you deceive ( working on the premise that this has happened)
The ato I hope not or you have inspectors looking thru all your paperwork for weeks.
or the lender which you hope not as the loan will default.You will be required to pay back and I would find it difficult to find a lender that would lend to person or company that had just had a loan cancelled for deceptive practice.
I have a couple of friends who are also in finance and one very good friend uses a saying for his business.
I don’t get you to the start line I make sure you finish the race.
This topic came up last friday night over a couple of beers re this type of loans and I thought I would post a thread for interesting postings.
should you have many of these types of loans or discrepencies, don’t run for the nearest bus to get under it see your accountant talk to them and get it fixed so the paperwork matches.
how ??.
thats what the pencil boys are forhere to help
Hi Gross (hope you don’t mind me using your first name!?! )
Very interesting thread and well worth thinking about. I had always wondered what sort of trouble people my get into with these loans.
Lucky for me I have NOT done any of this so I won’t have to phone my pencil man. I am too honest for my own good sometimes.But I am glad I am this time.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
hi giddo
I am no saint and I work off a very old neville wran saying there is nothing illegal as long as you work within the system and the guy in the wig has not already said its illegal( para phasing him) there are alot of systems out there that people use that are not dishonest but they would not be called honest either they are in the grey area of business and some the ato hasn’t fallen on either side( yet).
Some times I have to walk like a jedi and use the force because there is no rules in some kind of finance deals.here to help
Hi GROSS,
Did you say walk like a JEDI?
I do not know much about Star Wars stuff, but that must be a good thing I am guessing.
I am more likely to walk like a penguin with a sore toe.
I like the idea of using “The Force” though.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
The trouble with overstating your income is that on most applications you must sign a statutory declaration. If you declare something to be untrue, then this would be an offence against the act with a maximum penalty of 4 years imprisonment.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | 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
I can think of several good reasons people use low/no doc loans, and it doesn’t have to be because they are hiding income from the ATO.
Banks servicability calculations for full-doc loans can make a number of assumptions that can mean someone doesn’t qualify for a loan for servicability reasons when in reality they could easily afford it. For example
1) Some banks make no allowance for negative gearing tax benefits
2) Some (all?) banks will not take into account the real rent you receive if you rent a house by the room to students if you have financed it under a residential loan, instead they use in their calculations the much lower rent you would recieve by renting it as a whole
3) Some (all?) banks don’t take into account that a car lease can be tax deductable
4) Some peoples circumstances dictate that they can’t have their spouse on either the title or the loan as their spouse may earn great income but be in a proffession with a high risk of being sued.Combine some or all of those for a couple investing in IPs and before long they will have to do low-docs.
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