I'm using RAMS as my lendor as limited deposit and they seem to be quite competive with interest rates and loans. Has anyone used them in the past? I currently have conditional pre approval awaiting house valuation.
Just working out what type of structure to go with for my first loan, I was going to go variable interest rate (they have a discounted rate for 3 years), interest only option for 5 years as I plan to move in roughly 2 years and rent the house out with the plan of selling in the next mining boom. Does this sound ok, are there any other features I should consider such as redraw facility, I believe the loan has one with no fees and no minimum.Should my broker at RAMS be doing my FHOG applicationa and sending it in for me, they have sent me the documents to fill out and said they will notify me of the address to send to when the finance is unconditional but I have been told they should be doing the form and sending it for me as my personal application make take weeks to process whereas a lendor should have it done in 5 days by the OSR?
Thanks,
Firstly, RAMS is a non bank lender so you will have high exit fees and no offset account. These are major drawbacks!
IO is the way to go, especially if you will be moving out. Redraw shouldn't matter as you should not be paying down the loan if IO. Do you understand the tax implications of paying extra and then trying to withdraw later?
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
Yes as an authorised agent of the OSR the lender can submit your FHOG application and the funds will be available at Settlement.
They will want you to sign it and provide the relevant Certified Identification but other than that they should prepare it for you.
Richard Taylor | Australia's leading private lender
Thanks Terry and Richard,
As you mention the redraw shouldnt matter to much and I didnt plan on using it, the idea was just to pay down the interest portion, move out in 2 years and rent the house or sell it depending on what it looks like out here. My theory is the money i save on principle can be put into savings and value adding reno's. sorry for all the questions, Im a bit green if you haven't noticed.I will chase up the exit fees, and I had a research on the tax implications on the redraw. From how I understood it redraw facility would be bad for me in about 2 years time when i rent the property out, however a Offset account would be a good idea which isnt available through RAMS. So would it be wise to use RAMS to kick start with my first home, then change banks when I'm ready to rent the house out. Meanwhile all of the excess payments and money that would have gone to principle, just put this in a high interest savings account with my normal bank? Would this be a fair strategy, even though the exit fees might be quite high i would just have to live with that.
Paying down principle means you are locking your cash up. What if you decided you wanted to buy a PPOR down the track? all your cash would be in the investment loan so if you took it out to use as deposit it the interest on this would not be deductible.
I wouldn't use rams myself. It maybe ok if you get a cheap rate and have a loan with an offset account elsewhere and intend to stay there more than 5 years, but why bother? Why not just use a bank?
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
thanks terry,
reasons for using RAMS is because they were one of the few lenderrs allowing me to do 95% LVR with LMI capped on the loan. I looked through a few different banks and though RAMS were quite competitive.I wasnt going to pay down my principle, i was going to use the money that would have been spent on principle and put it into my savings account with my bank. I could go to a bank i but i didnt want to take to many hits to my credit report just in case i got knocked back. Westpac was my next choice as i bank with them, they however are only lending 250k max in mt isa. Does what I have described above seem ok for my first property? Paying interest only whilst saving as much as possible.
Yep, IO is great and not paying down the loan is great. You could use a savings account for spare cash, but it would be so much better with the offset. Maybe you should see a broker and see if there are any other options out there. I wouldn't worry too much about the hits on your ccredit file.
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
Terryw wrote:I wouldn't worry too much about the hits on your ccredit file.Hi Terry,
I am interested in this comment as I understand you used to do brokering. This is something I am concerned about as I move forwrd with my investing. I have read in other posts on the forums that there can be problems with this?
Regards,
Andrew
itsandrew
Go as far as you can see and you will see further.
its best not to go crazy, but one or two hits won't make much difference.
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
thanks terry,
when i was talking to rams to get pre approval they questioned hits from last year and made me write a document stating what they were to clarify, this is why i thought it might not be a good idea, will look into it, thanks very much for the advice.
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