I think I have acquired a vague (I originally wrote "modest") understanding of cashbonds. But I have some questions:
1. What funds do you use to purchase a cashbond in the first place? Eg. can you purchase a cashbond with "borrowed" funds (including PPOR equity) or must it be funds you "have"? Or is the cashbond itself secured against property?
2. If you have say $150K to purchase a cashbond in the first place, would it be considered "safer" to simply use that to setup appropriately sized deposits to achieve the correct serviceability?
3. It's probably an understatement that this technique requires capital growth to work! What steps does/should one take to ensure their investment is not spiralling out of control?
4. Is it fair to say that cashbonds are a way of accessing equity growth in advance of it actually happening and that, because of this, you are increasing your leveraging ability?
Thanks
Kevin.
1. What funds do you use to purchase a cashbond in the first place? Eg. can you purchase a cashbond with "borrowed" funds (including PPOR equity) or must it be funds you "have"? Or is the cashbond itself secured against property?
2. If you have say $150K to purchase a cashbond in the first place, would it be considered "safer" to simply use that to setup appropriately sized deposits to achieve the correct serviceability?
3. It's probably an understatement that this technique requires capital growth to work! What steps does/should one take to ensure their investment is not spiralling out of control?
4. Is it fair to say that cashbonds are a way of accessing equity growth in advance of it actually happening and that, because of this, you are increasing your leveraging ability?
Thanks
Kevin.