Austral Mortgage Corp.



From: Noel Griffiths

Hello to all,
Melbourne TV,Ch.9@6:30pm-19/08/02 had a segment on the Austral Mortgage Corporation and the Federal Court ruling over the ATO`s challenge and subsequent loss regarding the A.M.C`s. product marketed as "The Wealth Optimizer"( believe it is mentioned on the nineMSN site under news and current affairs which for some reason I cannot access.

I worked through the example posted on the A.M.C. website,read the info AND I just simply don`t get it!

I only achieved a CR in accounting and that was after a re-mark!

Q:Is there any body out there that can explain the pros/cons of the product?


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Reply: 1
From: Rolf Latham

Hi Noel

Simply put, I think you will find that the product, can be achieved using ANY lenders product mix, indeed many others had similar packaged deals out there including majors like BOM. The reason that Austral is getting such a good run out of this is that theirs was the product in Question re the HARTS case.

I May be mistaken (often wrong, never in doubt, Austral's product is based on the Adelaide Bank Property Line, a great but exxy Line of Credit product. Where combined borrowings > 250k are involved you can make some very serious savings on interest rate alone

You have an Investment property that achieves income, but attracts interest. You have a home loan as well.

You pay all your income directly into the home loan. When it comes time to pay interest each month, you DO NOT pay the interest on the investment loan, you simply add it to the Investment Loan. This is where the difference is, under old circumstances you must draw the interest cost of the investment loan out of your home loan.

What happens is that your home loan debt decreases more quickly, but your Investment debt builds proportionately.

Outcome, home loan = non tax deductible debt paid out much faster than before.

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Reply: 2
From: Luke W

Hi Noel...

There have been a number of threads discussing what benefits we might gain from such a product...
Consensus seems to have said that an (un)reasonable amount of crystal ball gazing was needed to predict what the ATO and/or government might do to further argue the case or change the law. Some also suggested trying to set up such a facility in a way that you can jump either way (deductible or not) depending on the possible appeal.

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