I am in the process of buying an (off the plan) house and land package valued at 400,000 (going to be positively geared or neutral at worse) and unsure what loan and structure i should be leaning towards.
Im currently on NET 130k per year and will have around 20k saved after all costs come out for the h and l package, a 500k house which i have 420k left on the loan. currently rented and costing me $400 per month i will be moving into this house in december for 6 months to keep the FHOG.
Im about to enter into a conditional pre approval for the h and l package and the broker i am using is suggesting to go variable as i will have more options in the future,(i plan to buy an ip every 4 months either neutral or positive) where as i think that a fixed rate over 3 years will be a better option eliminating risk.Which do u think will be best a 3 years fixed at 6.4% or a variable at 6.8%?? or 5 years at 6.8%
i cant see the benefits of getting variable?? if i max out my borrowing power with this bank cant i just get another loan with a different bank and keep moving.??
What would be the best way to maximise my borrowing power do i lean towards a trust structure what do u think the best step forward is from here i am quite young and any advise would be greatly appreciated.
Regards RobHi Rob,
Firstly Welcome to the forum and i hope you enjoy your stay and can learn + share some extra ideas!
Looking at the rate you have quoting im guessing your going with ANZ? or Suncorp? and there is a restriction that your LVR needs to be under 80%? if so then i would say your best to pay a bit of LMI for what you want to achieve ( buy more IP in 4 month time) – as you need every dollar you can save for the deposit for the next purchase etc…
Regarding fixed rate; your broker is right to a point- if you fix then it’s financially not wise to move as the fee to break a fixed price contract is HUGE!! But having said that a Fixed rate can help with budgeting and can improve serviceability and borrowing capacity.
Regarding what you should do and structure; would def need more info to give you a correct reponse/answ.
Reagrds
Michaelris4rob wrote:I am in the process of buying an (off the plan) house and land package valued at 400,000 (going to be positively geared or neutral at worse) and unsure what loan and structure i should be leaning towards.Im currently on NET 130k per year and will have around 20k saved after all costs come out for the h and l package, a 500k house which i have 420k left on the loan. currently rented and costing me $400 per month i will be moving into this house in december for 6 months to keep the FHOG.
Im about to enter into a conditional pre approval for the h and l package and the broker i am using is suggesting to go variable as i will have more options in the future,(i plan to buy an ip every 4 months either neutral or positive) where as i think that a fixed rate over 3 years will be a better option eliminating risk.Which do u think will be best a 3 years fixed at 6.4% or a variable at 6.8%?? or 5 years at 6.8%
i cant see the benefits of getting variable?? if i max out my borrowing power with this bank cant i just get another loan with a different bank and keep moving.??
What would be the best way to maximise my borrowing power do i lean towards a trust structure what do u think the best step forward is from here i am quite young and any advise would be greatly appreciated.
Regards RobMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Thank you already learning so much and only been on here for a few days, I would be using Commonwealth 6.48% fixed 3 years min 97% LVR with LMI or variable 6.8% due to already having a loan with commonwealth apparently im eligible for the 1% discount.
So if i am looking at maxing my borrowing power then i should definatly go for the variable
ris4rob wrote:So if i am looking at maxing my borrowing power then i should definatly go for the variableIt depends on the bank. if it’s CBA that you want to go with; then it makes no big diff to your borrowing capacity if you go Var or Fixed.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
You can always fix later too. At least make sure part of your loan is variable and set up a 100% offset account on this as it will save you interest (esp with a large income).
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
Hi Rob, (Fix my previous post)
at the moment 2 years fix from ING is 6.09%.
You should only get fix loan for the right reason.
see article below, hope it helps
Ron the Mortgage Broker wrote:Hi Rob, (Fix my previous post)
at the moment 2 years fix from ING is 6.09%.
Not a good lender to opt for if you plan on accessing equity at some point – particularly if you were planning on topping up to 90% LVR
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thank u very much yes i think variable will definatly be the go! What is the best way to structure should i be looking at a starting a business name to control a trust similar to what steve uses in his book or would it be too late considering i already have one loan in my own name i just want to make sure i have max borrowing power and any decisions now could ultimatly affect the future.
Kind regards Rob.Business names are different to trusts. A name is not a legal entity and is really just a name. eg you can trade as ris4rob if you register this name – but the entity will be yourself. or you could set up a company ALB Pty Ltd and have this trade as ris4rob.
There are many issues surrounding structures with lots to consider. What you may be referring to is to set up a company and then have this act as trustee for a trust. This will not help you increase borrowing power, but should be looked into for other reasons.
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
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