All Topics / Finance / Need some advice form a good mortgage broker!

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  • Profile photo of PosEnterprisesPosEnterprises
    Member
    @posenterprises
    Join Date: 2006
    Post Count: 290

    Help needed!

    I am not sure what to do.  Currently have IP which is heavily negative geared!  Rent increase early next year still won't cover the shortfall and is eating into my LOC very fast.

    Can anyone help please?

    Just need some strategy because i don't want to sell as i will lose alot due to break costs and being with RAMS they are killing me with interest payments.

    thanks

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Well you need to either increase your income or decrease your expenses.

    Have you done the sum on refinancing even after factoring in the break costs?  It is probably not worth it but good to do the exercise.

    Have you got your loan on interest only?  This will reduce the outgoings until things are more comfy.

    Have you any ways to increase your income to meet the shortfall?  Overtime?  Home business?  PT Job one evening a week?

    Have you varied your PAYG tax to reflect the tax deductions from the negative gearing?  In effect you can spread your large tax claim over each pay.

    Anyone got some more ideas??

    Cheers,

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    If you have a reasonable LVR, and are on a variable rate loan with your lender, (baa) depending on the size of the loan it may indeed be well worth looking at refinancing. Do the sums, or perhaps give us a bit of an idea what interest rate/loan size/property value you are talking about. Simons point on the tax variation is critical for heavily neg geared properties.

    Have you got some good capital growth out if it to make up for the neg gearing or is it too early?

    Cheers

    Profile photo of MaxxiMaxxi
    Member
    @maxxi
    Join Date: 2007
    Post Count: 49

    Hi PE,

    We currently have a great loan for Investors which is a 3.99% repayment for 2years …. and this can be carefully rollover again for a longer term.  The rest of the interest (at a competitive rate) is simply capitalised into the loan.  It means that the capitalisation over the 2 yrs is about 7% …. You will need equity in your property though. Full-Doc at 83% LVR Cap to 90% and Lo-Doc 73% LVR Cap to 80%.  It's in conjuction with a reputable lender.

    Email me for more information and I can assess your situation more thoroughly.

    Cheers

    John

    [email protected]

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    John

    Isn't that just the same as paying the loan, or part of it, with the LOC?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Terry it is exactly the same.

    Sorry John but i think you have mentioned your new product somewhere in 5 of your opening 8 posts.

    Post, why not look at adding a + geared property such as a wrap to your portfolio which should give you a nice amount of extra cash each month and offset the shortfall.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of PosEnterprisesPosEnterprises
    Member
    @posenterprises
    Join Date: 2006
    Post Count: 290

    Good news everyone i have just got a new job offer which may help me with my short term cashflow problem.  So i might not have to sell my IP.

    Thanks for the help and advice!

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    I think this is a good warning to people about the strategy of using a LOC to fund the shortfall. Its an okay strategy if you are doing it because you chose to. However, its not a good idea if you chose this strategy because you have to (i.e. only way to hold the property). Too many risks (e.g. income decreases, no capital growth, rates income, vacancy, etc.). Not my cup of tea.

    Profile photo of blueheelerblueheeler
    Participant
    @blueheeler
    Join Date: 2007
    Post Count: 45

    Have you thought about opening up a 100% offset account in conjunction with your morgage loan account? With LOC, you can't claim as a tax deductable. Are you claiming depreciation?

    What about adding value with a quick reno, increase your rental income, valuation, refinance and add equity to your 100% offset account to counter some interest.

    That's my thought and maybe someone else may have a better idea.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Blueheeler,

    What makes you think you cannot claim the interest on a LOC?

    Having a 100% offset account won't help with any shortfalls if the person is low on cash either.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

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