I'd like your input on being able to secure finance and your recomendations on who to see.
Here's our situation :
PPOR
Mortgage $315,000.00
Value $445,000.00
Equity $130,000.00IP
Mortgage $289,000.00Value $289,000.00…I know, I know. We bought just as things bottomed out. Negatively geared
Equity BIG FAT NOTHING.We have 1 credit card with a limit of $1000.00 and it has nothing owing on it. Emergencies only.
We have 5k in cash that I'm about to whack on the PPOR just to get it out of the way – so we can call on it if we need to as the PPOR mortgage has redraw.
We have a car loan at $460.00 p/fn – this has between 3 & 4 years left on it
Our combined income is
HIS 100,058.00
MINE 68,500.00TOTAL $168,558.00
We have no other debts/liabilities – just the mortgages and our household expenses etc. We have 2 kids as well.
Income derived from the IP is $14,456.00 pa. Payments are $20,004.00…god that looks so sad….After all our expenses are met – we have just under 4k per month to kick about. Saving at the moment till we make a decision on the IP's
I'm looking for CF+ places at the moment. Have my eye on a few. Based on the figures above and the brief info I've given – what do you think our chances are of securing finance for IP's?
There are a few IP's that are well, well under the 100k mark and the are CF+. Then the flipside is one I'm looking at that's going for 880K but it's highly CF+ – in fact after all expenses it makes an excess of $550.00 p/week.
So based on the above, how do you think we'd fare?
IMO you should start by getting the current IP to CF+ status – set up an offset account linked to the IP and dump everything in that. THEN start looking at your next one.
AH
I hate to say it sounds like the loans maybe Cross collateralised (one of my pet hates) and not structured correctly from day 1.
I am sure it was a typing error on imulgi's part but the 100% offset account should be linked to the PPOR loan and not the IP loan. DO NOT dump the cash into your PPOR !!!
The loan on the IP should be standalone but from what i read is being supported by the PPOR. Yuk!!!
Hopefully the IP was purchased either in your hubbys name or as Tenants in Common to maximise the deductions.
Suggest you might like to look at a DFT structure for the next IP if the property is to be + cash flow especially with 2 little ones.
Firstly i would be sorting out the loan issues before rushing in and buying again.
Richard Taylor | Australia's leading private lender
It wasn't a typo, but I've just learned something, so thanks Richard.
Can I clarify why you'd put it on the PPoR? Is it because the interest on that one isn't tax deductible?
imugli wrote:IMO you should start by getting the current IP to CF+ status – set up an offset account linked to the IP and dump everything in that. THEN start looking at your next one.Imugli
But how do I get the IP CF+??? We're in a bit of a bind in terms of tenants. The ones we have now are excellent. Always on time, treat the place well and they have taken two increases on the chin. Two previous lots were just horrendous and I don't even wanna go there. My husband NG's on his wage but we're still short a fair bit. Is there something I'm missing with ways to make it CF+??
Thanks for your advice…keep it coming. I'm open to it all!
Cheers
Qlds007 wrote:AHI hate to say it sounds like the loans maybe Cross collateralised (one of my pet hates) and not structured correctly from day 1.
I am sure it was a typing error on imulgi's part but the 100% offset account should be linked to the PPOR loan and not the IP loan. DO NOT dump the cash into your PPOR !!!
The loan on the IP should be standalone but from what i read is being supported by the PPOR. Yuk!!!
Hopefully the IP was purchased either in your hubbys name or as Tenants in Common to maximise the deductions.
Suggest you might like to look at a DFT structure for the next IP if the property is to be + cash flow especially with 2 little ones.
Firstly i would be sorting out the loan issues before rushing in and buying again.
Richard
I remember you saying this previously about the loans being cross colateralised….
This might sound a bit lame but how do I work out if the IP loan is set up the way you said – cross collateralised?. We've just refinanced on PPOR for a better rate and we had no problems doing just the PPOR but we did stay with the same lender – it's Aussie and we changed from ANZ to Macquarie. There were no issues with the IP on this but is this becuase it was all staying under the Aussie roof?
Can you tell me how I can change the situation? And if I can't, what bearing does it have on us being able to borrow for a CF+ place? From what I can see and what you say it looks like the structure is one we're stuck with…lesson learnt I guess.
What is the DFT structure you've spoken about? We bought the place under Hubby's name as he's the higher earner.
God I love this sight…just wish I'd found it about 4 years ago.
Thanks again for all your advice
Hi Aim
Again hate to keep the bad news coming.
Mac Bank have pulled up stumps in the lending market so wont be open to another IP.
This sort of situation is exactly one of the many issues with X collateralising the loans together.
I am suprised the Mac Bank deal was ever cheaper than what you could negotiate with Anz and at least there you could split the loans to have them each standing on their own and not supporting each other. With Mac that is not a choice or option.Regretfully doubt if the Aussie Broker has any idea on loan structuring probably doesnt even have a IP portfolio himself so will look at you blankly when you mention it.
A Discretionary Family Trust would give you numerous options when it comes to buying + cash flow properties.
Richard Taylor | Australia's leading private lender
AimHigher wrote:imugli wrote:IMO you should start by getting the current IP to CF+ status – set up an offset account linked to the IP and dump everything in that. THEN start looking at your next one.Imugli
But how do I get the IP CF+??? We're in a bit of a bind in terms of tenants. The ones we have now are excellent. Always on time, treat the place well and they have taken two increases on the chin. Two previous lots were just horrendous and I don't even wanna go there. My husband NG's on his wage but we're still short a fair bit. Is there something I'm missing with ways to make it CF+??
Thanks for your advice…keep it coming. I'm open to it all!
Cheers
A couple of ways…
Increase the rent, probably not an option given the 2 increases already…
Reduce the interest you're paying, but this would obviously affect the tax deductions available to you.TBH, probably best you listen to Richard over myself, he's far better versed in these things
imuli, Yes you always link the offset account to the non deductible debt.
Only if you have no NDD would i link an offset account to an investment loan.
Richard Taylor | Australia's leading private lender
Qlds007 wrote:imuli, Yes you always link the offset account to the non deductible debt.Only if you have no NDD would i link an offset account to an investment loan.
Thanks Richard!
Qlds007 wrote:Hi AimAgain hate to keep the bad news coming.
Mac Bank have pulled up stumps in the lending market so wont be open to another IP.
This sort of situation is exactly one of the many issues with X collateralising the loans together.
I am suprised the Mac Bank deal was ever cheaper than what you could negotiate with Anz and at least there you could split the loans to have them each standing on their own and not supporting each other. With Mac that is not a choice or option.Regretfully doubt if the Aussie Broker has any idea on loan structuring probably doesnt even have a IP portfolio himself so will look at you blankly when you mention it.
A Discretionary Family Trust would give you numerous options when it comes to buying + cash flow properties.
Richard
So basically we're stuck with it all?
I just can't believe there's no way out of this for us. Felling very disheartened right now.
Thanks for your advice.
AH
As i say i dont want to be the bearer of the bad news.
Shoot me an email with a spreadsheet of what you have basically a slightly more indepth version of what you have given here and i can come back to you with some suggestions.
Richard Taylor | Australia's leading private lender
Qlds007 wrote:AHAs i say i dont want to be the bearer of the bad news.
Shoot me an email with a spreadsheet of what you have basically a slightly more indepth version of what you have given here and i can come back to you with some suggestions.
Richard!
Not bad news – just advice…that I should have gotten first. Gotta put a positive spin on it if no reason other than my own sanity!
That'd be great.
I'll get onto it tonight.
Thanks so much for your help.
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