Its fixed. I dont know if any are variable. Havent had the need to know.
Why would you want a variable return?
Serves no purpose in CB structure.
Cashbonds for Dummies
- Thread starter rj
- Start date
Its fixed. I dont know if any are variable. Havent had the need to know.
Why would you want a variable return?
Serves no purpose in CB structure.
Why not just cash in (commute) the CB after its served its purpose & got you across the line?
Now you're talking !!!
Didn't realise you could do that. Thought you were locked in for the duration of the annuity. I'll have to download some PDS's and check out the exit costs.
Is this the strategy you use, or do you just let them roll full term to reduce your tax liability ?
I've hit the DSR wall, so I'm investigating ways around it.
Thanks again for your informative post.
Didn't realise you could do that. Thought you were locked in for the duration of the annuity. I'll have to download some PDS's and check out the exit costs.
Is this the strategy you use, or do you just let them roll full term to reduce your tax liability ?
I've hit the DSR wall, so I'm investigating ways around it.
Thanks again for your informative post.
I originally hit the DSR wall back in 2005 and used a CB (learnt from course a couple years beforehand) to get me across the DSR line. I used the CB then commuted it. The course never mentioned about commuting it once its got you across the line - It just came to me one day. I thought to myself why lock my capital away for the CB term, its serrved its purpose. It costs me more the longer I keep it structured. So by commuting you get back control of your capital to use elsewhere or as a buffer and save some cashflow at the same time.
Hope this helps.
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Thanks Rix; yes it does.
12 month cashbond
Hi Rixter,
I read a discussion elsewhere where a financial adviser suggested that the major banks will include income from a 12 month cashbond in their serviceability calculations (no five your minimum). I think this would be advantageous because there would be little need to commute the annuity. It would give you more flexibility when IRs start going up again.
I’ll be looking forward to reading about your progress – thanks for sharing.
Regards - Ben
Hi Rixter,
I read a discussion elsewhere where a financial adviser suggested that the major banks will include income from a 12 month cashbond in their serviceability calculations (no five your minimum). I think this would be advantageous because there would be little need to commute the annuity. It would give you more flexibility when IRs start going up again.
I’ll be looking forward to reading about your progress – thanks for sharing.
Regards - Ben
Yeah Ben , I started that discussion with that financial adviser.. As a matter of fact he was the one who taught me the strategy back in 2003 and I applied in 2005.
Thanks for the post.
Thanks for the post.
Hi Rixter,
Do you mind if I enquire into your progress with this? The topic is suddenly quite relevant to me as I've just been knocked back for a full-doc loan.
Is there a decent site for comparing the rates offered by the annuity providers?
Regards - Ben
Do you mind if I enquire into your progress with this? The topic is suddenly quite relevant to me as I've just been knocked back for a full-doc loan.
Is there a decent site for comparing the rates offered by the annuity providers?
Regards - Ben
Ben, as far as Im aware there is no Annuity comparison website, other than looking on each providers website then weighing up the pro's & con's of one over the others yourself.
Do you have sufficient available funds in an LOC/s to purchase an annuity? If so, how much and what size annuity are you looking to purchase?
Do you have sufficient available funds in an LOC/s to purchase an annuity? If so, how much and what size annuity are you looking to purchase?
Yes. I have open lines of credit that are currently my buffer against stormy weather. I would be prepared to commit some of this buffer to a cashbond.
Don't know the answer to that. It depends on the policy of the lender I suppose. Will take it up with my MB and keep this thread updated as I go.
hi rixter
is there a reason you don't use bank bonds instead of cash bonds.
there are the same and work the same but they re at a rate of 9% not 3 or 4%
also do you arbitrage the bonds or have you look at that also
I call them blown bonds but you can do that with bank bonds the cash ones rates are to small
I have enjoyed the post and is very good information
bond or bond trading can't be recommended
but they are very effective
as for westpac not accepting them its a bit of news to me as I know they do not only do they do them but you cn buy into westpac bank bonds and use the income as serviceability unless they have change within the last 3 months
westpac was pushing a bank bond at 9.5% about 4 months ago before mr rudd assisted them out.
I like bonds but they require cash to make them happen
and the bond market is a mechanism to invest not a reason for a fallout as was the case with westpoint.
these can be a very good way of showing income
and where the rate of money is low and the rate on a bond is high then the do get look at
security
there s very little security when in bonds as they are a base item mr rudd etc does not protect when investing in these vehicles
so you do need to make sure that the bond that you are buying into is going to be around when the bond matures.
I like bank bonds or institutions with diverse platforms.
and because of the current financial issues have not looked at bonds for the above issue.
and have moved to similar investing vehicles that can also be leveraged.
but again interesting post and thanks for the time
rixter
is there a reason you don't use bank bonds instead of cash bonds.
there are the same and work the same but they re at a rate of 9% not 3 or 4%
also do you arbitrage the bonds or have you look at that also
I call them blown bonds but you can do that with bank bonds the cash ones rates are to small
I have enjoyed the post and is very good information
bond or bond trading can't be recommended
but they are very effective
as for westpac not accepting them its a bit of news to me as I know they do not only do they do them but you cn buy into westpac bank bonds and use the income as serviceability unless they have change within the last 3 months
westpac was pushing a bank bond at 9.5% about 4 months ago before mr rudd assisted them out.
I like bonds but they require cash to make them happen
and the bond market is a mechanism to invest not a reason for a fallout as was the case with westpoint.
these can be a very good way of showing income
and where the rate of money is low and the rate on a bond is high then the do get look at
security
there s very little security when in bonds as they are a base item mr rudd etc does not protect when investing in these vehicles
so you do need to make sure that the bond that you are buying into is going to be around when the bond matures.
I like bank bonds or institutions with diverse platforms.
and because of the current financial issues have not looked at bonds for the above issue.
and have moved to similar investing vehicles that can also be leveraged.
but again interesting post and thanks for the time
rixter
For give me if I've got the wrong end of your stick, but you dont tell your lenders you are structuring a CB - they most probably (along with most mortgage brokers) wouldnt have even heard of such a set up. All the bank/lender needs to know( and you provide proof of) is that you have a set income for x time coming to you from an annuity.
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What if he mentions your name?
Maybe if he goes back to the bank and says it's "Rixters Cash Bond Strategy" they might say "Oh ... why didn't you say so .. come take a seat while the money truck backs up .."
LOL.......well, it worked for me - plus they've given me more than the advertised top tier pro package discount!
The question I got the MB to ask was whether cash bond income would be taken into consideration when calculating assessible income. Should I have used the term "annuity" instead? Or maybe not have mentioned it to the banks at all?
Annuity is all they need to know. The term CB refers to the financial structure of how 'you' are using the annuity to increase dsr in the banks eyes.
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