All Topics / Creative Investing / Is this possible?

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of salacioussalacious
    Member
    @salacious
    Join Date: 2003
    Post Count: 373

    Hi,

    I have a question about a loan (not My loan). If you  have a $360,000 loan on a ppr and i sold it for $530,000.
    If the loan was transportable but i could not buy anything for 12 month because i was building could i put the $530,000 in the same account where the $360000 resides as i would be $170000 ahead.
    A. would the bank let me do this and B. is this viable as i have had the loan for 2 years and if i started a new loan i would start paying interest all over again from scratch? C If it is possible how would you calculate this? Not to mention i would save on applying and closing loans.
    Thanks in advance
    Dom

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

    What is the security for the loan?

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

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

    Profile photo of salacioussalacious
    Member
    @salacious
    Join Date: 2003
    Post Count: 373

    I have a investment property if required?

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

    If you have enough equity in another property, then you could port the loan over to that one. But I can't see the point.

    You pay interest on the outstanding amount of a loan. So why not pay out the old one and take a new one when needed? It will be a lot of mucking around and the only benefits that I can think about are the savings in exit fees, but these are likely to be eaten up with other fees.

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

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

    Profile photo of Kent CliffeKent Cliffe
    Participant
    @kent-cliffe
    Join Date: 2011
    Post Count: 110

    Hi Salacious,

    Everyone's situation is different and you would need to talk to a finance broker or bank before doing anything. However, I have personally done a "Security Swap" on a property. My bank allowed me to have the money in a term deposit (loosing a small spread on the loan ofcourse) untill I had another property I could swap the mortgage to.

    All banking policy is different so the best way to find out it ask your bank or broker.

    Profile photo of angelinsydneyangelinsydney
    Participant
    @angelinsydney
    Join Date: 2011
    Post Count: 270

    Hi,

    Like Kent, I use term deposit as security for any home loans when I sell a property.

    There is very important reason for this: You don’t have to apply for a new loan for every home purchase; thereby eliminating one more factor that could potentially derail your acquisition. You know… the dreaded, “Sorry, you can’t afford it” scenario.

    Angel

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

    Hi Angel

    NCCP may have changed lenders attitude on that i am afraid.

    Cheers

    Yours in Finance

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of angelinsydneyangelinsydney
    Participant
    @angelinsydney
    Join Date: 2011
    Post Count: 270

    Hi Richard,

    When Cammeray sells, I intend to ask the bank to put the “sale money” in term deposit to be secured by the existing loan; as opposed to paying it off. I have used this strategy three times in the past, but as you said, there maybe a tightening on this strategy.

    I will report back whether successful or unsuccessful.

    Blessings.

    Angel

    Profile photo of Andy BAndy B
    Participant
    @andy-b
    Join Date: 2010
    Post Count: 9

    I am looking at doing the same thing to purchase a property subject to sale but have a maximum of 3 months in a term deposit unfortunately. I fail to see why but thats the way it goes.

    Profile photo of angelinsydneyangelinsydney
    Participant
    @angelinsydney
    Join Date: 2011
    Post Count: 270

    Hi All,

    Good morning. Woke up earlier than usual.

    I have always, in the past, put proceeds of sale in term deposit to secure existing loan. It isn’t always possible to find a property to buy after you’ve sold one. Honestly, I can’t be buying just because I’ve got to have a simultaneous settlement, that would be utterly suicidal.

    In some cases, I’ve been allowed to put the term deposit in for three months. I have, at other times, found properties to buy within weeks.

    My bank is happy to do this (this one is NAB). I also have term deposits at St George locked in for 5 years (4 years to go). I won’t be breaking these term deposits as I was lucky enough to grab them when they were paying 7.6%. They more than cover the loan repayments so I’m in the money.

    Cammeray is secured with Westpac. I will find out this Friday if I will be allowed to do this. I will report back to you guys.

    Richard, you said there is a tightening in this strategy, like Andy B, I fail to see why. If I default on the loan, all they have to do is grab my term deposits.

    Thanks.

    Angel

    Profile photo of Andy BAndy B
    Participant
    @andy-b
    Join Date: 2010
    Post Count: 9

    Maybe i should refinance to st george and then sell. Suncorp are so difficult. Anyone know of a bank who will take over a 225k loan on a 390k property without taking servicing of other property into account? Probably impossible.

    Profile photo of angelinsydneyangelinsydney
    Participant
    @angelinsydney
    Join Date: 2011
    Post Count: 270

    Hi everyone,

    The term deposit in St George was not part of the plan. It was actually a result of one of the biggest mistakes I’ve ever done in my life. I hope those reading this would learn from my mistake….

    Back in 2009, I fixed three of our loans (my business partner and I) to a 8.40% 5-year fix in a panic. This was the time when there were 6 interest rate raises in a row. We had other loans which were variable so I was well and truly freaked.

    This goes to show that one must never make a decision based on panic, and certainly not in a way I did it, which was to fix three loans in excess of $800K.

    When we sold one property and I had to pay off the loan, the break-costs amounted to $80,000 — GASP— (fixed terms were to expire in 2013 – GASP!!!!)

    You all will not believe how much I sweated and how I just mentally kicked myself. If it were possible to die being kicked mentally, I’d be six feet under now.

    Humans can only really effectively do one thing at a time. We’re either listening to our ticking brain or our thumping heart. Age and experience were on my side, I just forced myself to focus: repeatedly telling myself: “Heart, stop thumping, I need to hear myself think.”

    My first course of action was to speak to Customer Service and explain our dilemma, “Even if I wanted to pay you the fee of $80,000, I don’t have that money.” I tried to stay calm in spite of my shattered nerves, and told myself not to shout at the customer service staff. No one wants to be the giver of bad news, and she certainly didn’t have to be at the receiving end of my panic.

    I asked if the bank would consider locking our money equal to the loan balance, for 5 years, as security to the loan. I didn’t mind paying the loan through to 2013, as long as I will have monthly income from the term deposit anyway. It is God’s mercy that the term deposit for 60 months, paid monthly was paying 7.6%. The term deposits expire in 2015. The rate differential meant that a small portion of the home loan must be paid by rental income. But this is alright, considering tha alternative was to pay the bank $80,000 in break fee.

    It is my hope that when the high fixed term home loan expires, it would go down and allow us to recover some “loss.”

    Newbies, even experienced investors get it wrong. And, wrong BIG TIME. I hope you learned some lesson from this post.

    I want to publicly thank St George for their assistance because to be truthful, even though we were excellent customers, they didn’t have to do what they did.

    Thanking you all.

    Angel

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

    hi Angel.

    $80,000 is huge!. I was stung the same way, but only for about $5k and I thought that was bad. I have never fixed a loan since.

    One of my friends had a fee of $160,000 to break his loans – and he paid it.

    Did you factor in the tax deductions? This could mean a huge deduction in the year of sale.

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

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

    Profile photo of angelinsydneyangelinsydney
    Participant
    @angelinsydney
    Join Date: 2011
    Post Count: 270

    Hi Terryw,

    I’m a huge number cruncher… yes, I did do all sorts of number calisthenics. Paying the $80,000 would have killed me – INSTANTLY. I feel really bad for your friend.

    When I have time today I will start a thread called, “MY mistakes you can learn from.” I believe people can learn from our mistakes, as much as from our successes. If that thread can stop people making the same error in judgment, it means I’ve helped someone.

    On CGT, I’ve never had to pay a lot of money on CGT. There are planning and timing you can do to NOT have to pay massive CGT.

    All my properties are in my name only (not family trust, no company name, etc) so easy for me to get away with lower tax payment. What’s killing me is the NSW land tax, but that’s another long story.

    Thank you.

    Angel

Viewing 14 posts - 1 through 14 (of 14 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.