Personal Loan for deposit? Yes or No?

Viewing 13 posts - 1 through 13 (of 13 total)

Pagey
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@pagey_1
Join Date: 2012
Post Count: 34
May 5, 2013 - 9:50 pm
Hey all,
So i have found about 6 properties i want to buy but have my money tied up in another IP. Therefore my question is, what is your opinions of borrowing the deposit by way of Personal Loan?
Details of the properties are:
3 houses, and 3 units for around $700k possibly.
95% mortgage means about a $70k Personal loan for deposit and purchase costs.
Properties have a combined yield of about 9.7% and a strong chance of good capital growth,
The plan would be to buy all of them, tidy one up and flog it to recover the 70k deposit. then sit back and enjoy the $500 pw positive return.
The rental return would easily cover the mortgage and PL repayments so i would not be out of pocket at all.
I welcome your thoughts????
Cheers
Pagey
Pagey
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Tony Fleming
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@the-dark-knight
Join Date: 2008
Post Count: 396
May 5, 2013 - 10:57 pm
It'll affect your servicability unless you have quite a high paying job. The morgage brokers should be on very soon to give their professional opinion /suggestions
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Jamie Moore
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@jamie-m
Join Date: 2010
Post Count: 5,069
May 5, 2013 - 11:20 pm
Hi Pagey
I don't like the sound of it – 6 x 95% non-gen loans. I personally can't see it happening.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jacqui Middleton
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@jacm
Join Date: 2009
Post Count: 2,539
May 6, 2013 - 12:20 am
Why is all your money tied up in another IP? What is the outstanding debt, and current market vallue of that property? I am wondering if it is worth refinancing that property to pull out some equity you see.
Jacqui Middleton | Middleton Buyers Advocates
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VIC Buyers' Agents for investors, home buyers & SMSFs.
Pagey
Participant
@pagey_1
Join Date: 2012
Post Count: 34
May 6, 2013 - 12:51 am
That would be the ideal plan but currently my IP is gutted undergoing a full Reno. So no equity available as yet.
I earn a good income so im quite comfortable that i would be able to obtain the required finance.
Once the 70k loan was paid back out the properties would be returning approx $500 pw positive cashflow plus the oportunity for capital grownth. Hence my interest.
Pagey
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Scott No Mates
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@scott-no-mates
Join Date: 2005
Post Count: 3,856
May 6, 2013 - 8:54 am
Consider another option (if you can get it) – a line of credit against another asset (eg PPOR) – lower interest rate, does not require crossing loans etc.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 6, 2013 - 11:14 am
95% loans are hard enough under normal circumstances. I would say it is unlikely you would be approved if you borrow the deposit.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Pagey
Participant
@pagey_1
Join Date: 2012
Post Count: 34
May 6, 2013 - 9:01 pm
I will go and talk to the bank today and see what my chances are.
My main question is, is there anything to be weary of? is it a big no no? It would take me some time to save the deposit required and by that time these properties will be sold.
Pagey
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Tony Fleming
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@the-dark-knight
Join Date: 2008
Post Count: 396
May 6, 2013 - 10:30 pm
I dont think you would be able to claim interest on the personal loans so apart from servicalbility that would be another issue.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email Me
NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
May 7, 2013 - 1:11 pm
DK wont be an issue claiming the interest on a personal loan if the funds are for investment however in response to Pagey's question you will not find anyone offer a 70K personal loan without substantial equity.
We are doing a lot of deals at the moment for clients who are looking at renovating where the loan comes with a 20k credit card which can then be used to improve the property or put into a deposit for the next deal and turbo charge your portfolio with little or no money down.
Very useful tool for investors starting out but needs to be on certain properties.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Pagey
Participant
@pagey_1
Join Date: 2012
Post Count: 34
May 9, 2013 - 8:48 pm
Thanks for the reply Richard,
So are you saying you can claim 100% of the interest, whether it be a mortgage at 6% or a credit card at 20%?
Cheers
Pagey
Pagey
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Jamie Moore
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@jamie-m
Join Date: 2010
Post Count: 5,069
May 9, 2013 - 11:15 pm
I couldn't see why not – it's the purpose that matters here and if the purpose is for investment then it should be deductible.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
May 10, 2013 - 3:06 am
Pagey
Yes not only does in not matter what the rate you are being charged but also the security you are offering to take your investment loan out against.
As i have said many times before if you get a lender to advance you the funds using the security of a pogo stick and the purpose was for investment the funds would be deductible.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender