Loans.com.au-6.58%- Good for Investors?

[amsaini15]

Hi All
I asked this question on another forum as well But some members may not be part of the other forum. I request opinions of the experts here.

Can you guys please comment upon the below Refinancing option for investors. To me, it has all the features, offset account, low Interest rate linked to RBA rate for first 5 years. $300 Discharge fee at any time of the loan.

What are the risk in refinancing with them?

Appreciate your observations on this.
Thanks

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Loans.com.au 6.58% / 6.59% variable home loan for new and refinancing

$0 loan application fee
$0 ongoing fees
cash rate linked for first 5 years
for loans up to 80% LVR
100% redraw offset account

has unlimited redraw with no $1000 limit, b-pay, visa debit access

 

[Wunderbar]

The thing I don't like about this is the loan application process. As many mortgage brokers can attest to - it is very difficult to submit an application to Credit's satisfaction because they're a bunch of morons. Online is just going to exacerbate this problem.

 

[amsaini15]

Wunderbar, I did not get you completely. What sort of Issues can come with their Application Process.
As far as my communication with them, its all standard requirements (Payslips, previous lender statements, etc) for the application process. I just need to fax/scan and send them. I have rough idea of the valuation of my property as I recently got free valuation done by BankWest.

Can you please elaborate on the problems? ALos other than Application process any issues with their offering? Thanks

 

[Wunderbar]

What I mean is that people in Credit find it difficult to understand any loan that is 'outside the box'. This means that if something on your payslip, bank statement or other documentation is 'missing' or 'unclear' - they are going to cause you a lot of problems. I've seen it all before

 

[Marty McDonald]

Sounds ok apart from the "redraw offset" which is just redraw by the sounds of it and not a seperate account ie no good at all if you want to pay rent etc into the offset and access for everyday living. If you do you will have effectively contaminated the pure investment nature of the loan.

 

[Rolf Latham]

Hiya

The offset is clunky, but im assured its clean for tax purposes, though I would prefer if the product provider or one of their clients would do a cookie cutter ATO ruling or at worst, simple letter of general advice from a tax adviser.

Same engine and product as Big Mac. Just cut price

ta

rof

 

[amsaini15]

Marty,
I did question that as well and requested written confirmation that the offset is truely a offset account and not just a redraw.

Reply I got via Email -
"As requested, I also confirm the following;
- The loan includes a redraw offset account with attached Visa Debit card and the offset is 100%. There are no account keeping fees or a fee for deposits to the account or withdrawals."

Rolf, Good suggestion. I will request them to provide me something in official writing.
---------------------------------------------
Another Question, Currently on my PPOR for e.g. On a $100K Loan I have $30K in redraw. Once I change lender to one which offer offset and have same setup $100K Loan with $30K in Offset. Will I be able to claim deduction on full $100K if I rent out property in 24 months time? Will ATO have any issues as I have moved $30K from redraw to offset type of setup? Please advise. Thanks a lot of everybody's assistance.

 

[delfredo]

You need to establish if the home loan account and the offset account are two separate standalone accounts (as opposed to all-in-one structure), and if yes, be satisfied that deposits in the offset account are covered by the Australian Government's Deposit Guarantee.

 

[Rolf Latham]

Another Question, Currently on my PPOR for e.g. On a $100K Loan I have $30K in redraw. Once I change lender to one which offer offset and have same setup $100K Loan with $30K in Offset. Will I be able to claim deduction on full $100K if I rent out property in 24 months time? Will ATO have any issues as I have moved $30K from redraw to offset type of setup? Please advise. Thanks a lot of everybody's assistance.

fraid that wont fly.

thats because the 30 k redrawn wont have been used to aquire that asset : (

if you use the 30 k for another income producing asset, it will be deductible against the income from that asset

ta
rolf

 

[amsaini15]

delfredo - Yep, Offset account is a separate account. Thanks

-----------------------------------------
Please help me with my biggest concern. My current Tax Agent is not much IP savy and could not help much clarifying my doubt.
Currently on my PPOR for e.g. On a $100K Loan I have $30K in redraw. I would change lender which offer offset and have same setup as $100K Loan with $30K in Offset.
Will I be able to claim deduction on full $100K if I rent out property in 24 months time? (I know I would loose deductibility on $30K if Rent out immidiately).
Will ATO have any issues as I have moved $30K from redraw to offset type of setup long time before renting out? Please advise.

 

[amsaini15]

Thanks Rolf. Did not check your reply.

I am surprised ATO can trace back 24 months to find how much is deductibile.

So realistically, anybody who started with redraw account (as they were novice) and later on decide to become investor, would loose deductibilty for the their hard earned saving in redraw when renting out

I guess I am left with no choice but to sell off this property whenever I plan to buy PPOR.

 

[Rolf Latham]

Thanks Rolf. Did not check your reply.

I am surprised ATO can trace back 24 months to find how much is deductibile.

So realistically, anybody who started with redraw account (as they were novice) and later on decide to become investor, would loose deductibilty for the their hard earned saving in redraw when renting out

I guess I am left with no choice but to sell off this property whenever I plan to buy PPOR.

Hiya

If a $ 2100 a year tax dedn on the interest makes it a non goer as an ongoing investment, then is it possible it wasnt a great structure or property even before the offset issue ?

Im not picking on you here, simply saying that the cost to SELL and replace the asset wont be small either, and I want to see if we can keep the baby in the bath tub

ta
rolf

ta
rof

 

[amsaini15]

Good Point Rolf. Makes Sense..

I just have to see I dont put any more monies in Redraw and change to Offset asap.

Last question-Do you have Loans.com.au in your Lender List?

 

[martino]

I'm also keen to find out more about these guys - on the face of it, it seems like a good deal.

amsaini15, please keep us informed if you go ahead and apply with them!

 

[amsaini15]

I'm also keen to find out more about these guys - on the face of it, it seems like a good deal.

amsaini15, please keep us informed if you go ahead and apply with them!

Martino, I Will keep all posted. Provided there are not many issues with revaluation, Approval, I am going with them.

 

[martino]

Thanks, I plan to do the same in the next few days once I have finalized a few things with my current lender.

 

[somersoftfan]

loan structure for loans.com.au

You need to establish if the home loan account and the offset account are two separate standalone accounts (as opposed to all-in-one structure), and if yes, be satisfied that deposits in the offset account are covered by the Australian Government's Deposit Guarantee.

Guys, I am really new here but become a fan of somersoft within weeks.
This is my question. Without doing my research, I have refinanced my PPOR loan to loans.com.au last month from ANZ.
This is my new loan set-up.
I have $400 in loan account and $200K in redraw offset account. They both are separate accounts but I don’t think their offset has Govt guarantee as they are not a bank.
My plan in is to buy an investment using equity in my PPOR. I came to know that loans.com.au only provides split loans with redraw offset account. So is it possible for me to use the $200K in the offset account as an equity split loan with 100% offset initially. Then use another lender to finance 80% of the new loan and use the split loan for 20% equity and the rest for ongoing interest payments?

 

[Loanscomau]

Guys, I am really new here but become a fan of somersoft within weeks.
This is my question. Without doing my research, I have refinanced my PPOR loan to loans.com.au last month from ANZ.
This is my new loan set-up.
I have $400 in loan account and $200K in redraw offset account. They both are separate accounts but I don’t think their offset has Govt guarantee as they are not a bank.
My plan in is to buy an investment using equity in my PPOR. I came to know that loans.com.au only provides split loans with redraw offset account. So is it possible for me to use the $200K in the offset account as an equity split loan with 100% offset initially. Then use another lender to finance 80% of the new loan and use the split loan for 20% equity and the rest for ongoing interest payments?

Hi somersoftfan,

Sorry, I'm not exactly clear on your point and question.

Am I right in saying you wanted to have loan A with one lender (say us) for 20% of the purchase price and loan B with a different lender for the 80%?

If I read this right you may run into an issue if you use one property to secure the two loans as one of the lenders would need to be the 2nd mortgagee which not many like.

If you were securing loan A with a seperate property to loan B hence both lenders were 1st mortgagee you would avoid the 2nd mortgagee issue.

Kind regards
Angus

 

[somersoftfan]

Thanks Angus.

Say I establish new equity LOC of 200K with loans.com.au by just moving 200K from my offset account to loan account. Then buy an investment property B funded 80% by another lender say CBA and 20% deposit from LOC (cash).

Property B will be the security for CBA loan. Property A will be the security for loans.com.au for existing home loan and the new LOC loan. In that way I can buy property B with 100% loan without any cross-collateralisation.

My question is would loans.com.au provide equity LOC loan? Banks and many other lenders provide equity LOCs.

 

[Loanscomau]

Thanks Angus.

Say I establish new equity LOC of 200K with loans.com.au by just moving 200K from my offset account to loan account. Then buy an investment property B funded 80% by another lender say CBA and 20% deposit from LOC (cash).

Property B will be the security for CBA loan. Property A will be the security for loans.com.au for existing home loan and the new LOC loan. In that way I can buy property B with 100% loan without any cross-collateralisation.

My question is would loans.com.au provide equity LOC loan? Banks and many other lenders provide equity LOCs.

Hi somersoftfan,

Loans.com.au don't offer a LOC product. There is one available from, our parent company FirstMac so maybe some options for you there if you are set on having an LOC.

Depending on what you want to do, you might be better off with a 'normal' loan and use the offset to carry out similar functions as the LOC, the benefit being that a normal loan is uaually much cheaper than a LOC.

For example, you could drawdown a loan of say $500k when you only need to borrow $300k, place the extra $200k in the offset (hence paying interest on the net loan of $300k) and then use the $200k in the offset as you need it (eg, deposit on another purchase, reno's etc).

Provided property A secures the loan of $500k, you wouldn't need to cross the security with property B and could get another loan for it stand alone (from the same lender or another).

Kind regards
Angus