Loans.com.au-6.58%- Good for Investors?
- Thread starter amsaini15
- Start date
Hi Rolf, thanks for your question.
We do offer cash out. We require a clear and suitable loan purpose, for example; reno’s, consolidate debts, fund another purchase, holiday, purchase car, etc. Obviously normal approval criteria would apply (eg, you can meet the payments, adequate equity, LMI over 80%, etc). If the loan is >80% the deal would need to satisfy the insurers requirements as well.
For larger amounts, say over $20k we would look for confirmation of an immediate need. For example, if you are ‘thinking about’ buying another property we would approve the required loan amount and release funds once a contract was signed. If you were doing structural renovations we would look for a building contract and release in tranches as progress payments were required.
We look at each situation on its merits and work with the borrower to set up a structure which meets their specific needs. From what I have seen that’s fairly common practice among the major lenders.
Trust this answers your question,
Kind regards
Angus
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Thanks Angus
it does answer my questions
ta'rolf
it does answer my questions
ta'rolf
Thanks Rolf and Angus.
But technically you are paying expenses and interest from the offset account of the new split loan. Since the money is NOT drawn from the loan account but from the offset account, would ATO treat the setup equivalent as an LOC set up?
Hi
Im neither from the ATO nor a licensed or otherwise tax adviser
In general, a combined loan offset structure would be indentical to a LOC,
Tip personal cash into an investment loc u have issues
Tip personal cash into an investment offset u have issues
ta
rolf
Im neither from the ATO nor a licensed or otherwise tax adviser
In general, a combined loan offset structure would be indentical to a LOC,
Tip personal cash into an investment loc u have issues
Tip personal cash into an investment offset u have issues
ta
rolf
What about other fees or portability of the loan?
Did you find out about other fees and costs? Are there any break even costs or exit fees (I know they changed the laws but please read the fine print), valuation fee, guarantors required (if bought in company/trust entity), will the valuation be disclosed?
I look at the overall picture in my accumulation phase and sometimes the valuation is more important to me than the actual interest rate if you are relying on equity to continue building or the flexibilty of the loan to be refinanced. Also who's the provider, so when I switch loans I make sure they are not "Collaretised - can't spell this word" NO "all monies" clauses, etc... What is your startegy?
Did you find out about other fees and costs? Are there any break even costs or exit fees (I know they changed the laws but please read the fine print), valuation fee, guarantors required (if bought in company/trust entity), will the valuation be disclosed?
I look at the overall picture in my accumulation phase and sometimes the valuation is more important to me than the actual interest rate if you are relying on equity to continue building or the flexibilty of the loan to be refinanced. Also who's the provider, so when I switch loans I make sure they are not "Collaretised - can't spell this word" NO "all monies" clauses, etc... What is your startegy?
I am a customer of loans.com.au. The refinance fees came to around $760 for me. This doesn’t include discharge fee. So you are looking around $1100 - 1200 if you are refinancing from a normal variable loan from a big BANK.
Valuation was done by a third party but they didn’t formally disclose the valuation.
Hi, I'd like to resurrect this thread and see what people think now it's 6 months on. I'm looking at loans.com.au as a potential for a loan at 6.29% with all the features previously described + no appln fee.
Although I did want a LOC I could probably live with the "tranche" approach as I want to use the money for deposit on a new purchase.
Does anyone have any opinions after getting the loans in the past 6 months? Anything you're not happy with?
Although I did want a LOC I could probably live with the "tranche" approach as I want to use the money for deposit on a new purchase.
Does anyone have any opinions after getting the loans in the past 6 months? Anything you're not happy with?
A lot of people just starting out in property investing don't know about the pitfalls of redraw... A mate of mine has been plowing money into his "redraw account" and couldn't believe that this portion of his loan would no longer be tax deductible if he withdrew the funds for personal reasons.
The ATO should have some leeway on this and allow people to correct this administrative blunder by redrawing the funds into an offset account.
The ATO should have some leeway on this and allow people to correct this administrative blunder by redrawing the funds into an offset account.
Thanks for the advice. We have another loan at a higher rate with a 100% offset which we put all our personal money into. I probably wouldn't get their redraw/offset for just this reason. I would keep it simple with just a P&I payment every month and throw in extra if I can.
Current offer is all same as the June 2011 offer I took. The only difference is in that offer, Rate was linked to RBA cash rate for First 5 years and rate was .11% off from the the standard rate. I could not have asked for more as I have got the lowest interest rate in the market with offset.
It has been pretty good going so far with them as lender. I would certainly recommend. Their customer service is always contactable and very helpful.
Personally I would be interested in knowing if funds in offset can be used for investment and are still good for taxation purpose?
According to Rolf above:
"In general, a combined loan offset structure would be indentical to a LOC"
Can somebody please confirm if this is true? I have a loan account of $25K with $20K in offset setted up at time of borrowing. So Can I use that $20K for shares/property investment and claim interest charges. I understand I cannot claim interest on $5k portion of this loan.
My last concern would be what if GFC 2 hits Australia. With no Govt. Guarantee, what are the repercussion for borrowers like us? May be Angus from Loans.com.au could shed some light into it. I noticed my Ts & Cs says interest rate are generally locked with RBAs rate for 5 years but that may change as per situation.
It has been pretty good going so far with them as lender. I would certainly recommend. Their customer service is always contactable and very helpful.
Personally I would be interested in knowing if funds in offset can be used for investment and are still good for taxation purpose?
According to Rolf above:
"In general, a combined loan offset structure would be indentical to a LOC"
Can somebody please confirm if this is true? I have a loan account of $25K with $20K in offset setted up at time of borrowing. So Can I use that $20K for shares/property investment and claim interest charges. I understand I cannot claim interest on $5k portion of this loan.
My last concern would be what if GFC 2 hits Australia. With no Govt. Guarantee, what are the repercussion for borrowers like us? May be Angus from Loans.com.au could shed some light into it. I noticed my Ts & Cs says interest rate are generally locked with RBAs rate for 5 years but that may change as per situation.
The offset Vs LOC question depends very much on the context of the situation, but generally speaking an offset account offers far more flexiblity for tax planning than using a LOC.
If you compare the cost of the loan (assuming they have the same interest rate & fees), then there's no real difference on the cost when you put money into either. This also assumes the offset account is a 'true' offset account (which many aren't).
What happens to a non bank in a GFC? The last time, the government guanranteed bank deposits. Immediately people started pulling their money out of non banks and even smaller banks and moved it to the big 4 banks. As the smaller lenders didn't have as much deposited funds, their costs of funding increased, so their rates also increased. Many went under which further increased rates. The government guarantee effectively destroyed most of the competition in the market.
I can't comment what happened to loans.com.au during this period or what might happen in the future, but I don't imagine the circumstances of their funding is that different from many other third party lenders.
If you compare the cost of the loan (assuming they have the same interest rate & fees), then there's no real difference on the cost when you put money into either. This also assumes the offset account is a 'true' offset account (which many aren't).
What happens to a non bank in a GFC? The last time, the government guanranteed bank deposits. Immediately people started pulling their money out of non banks and even smaller banks and moved it to the big 4 banks. As the smaller lenders didn't have as much deposited funds, their costs of funding increased, so their rates also increased. Many went under which further increased rates. The government guarantee effectively destroyed most of the competition in the market.
I can't comment what happened to loans.com.au during this period or what might happen in the future, but I don't imagine the circumstances of their funding is that different from many other third party lenders.
from my understanding, if you withdrew the 20k from your offset to invest the loan would not become partially tax deductible because you have invested your own money, not borrowed funds.
If you first paid down your loan with the 20k, then opened a loc with 20k available, then used this money to invest you could claim the interest on the loc
<insert long winded disclaimer here>
Loans.com.au doesn't offer loc. I need to know what I can do with offset for investment. I can setup 20K account with 20K in offset. If I withdrew that 20K from offset for investment will the interest be deductible for taxation? Thats the big question !!
No, because the funds are not borrowed, they are your personal savings.
Im assuming the 25k loan is secured by property. It might be an idea to pay down the loan and use the property as security to open a loc with another lender.
Probably best to talk to an accountant.
Im assuming the 25k loan is secured by property. It might be an idea to pay down the loan and use the property as security to open a loc with another lender.
Probably best to talk to an accountant.
technically yes.................
BUT
a bunch of what ifs and rules that will need to be followed, and some here think u may still have issues if ever audited. if it was mainstream lender with standard offset then not an issue IMO, BUT
seek specific advice from a tax professional on your specific data.
With the way the LOANS offset works, that may even be beneficial in this isntance, because it is NOT a savings account
ta
rolf
Thanks Rolf. I will check with my Tax Agent.
I just spoke to Sales Manager with Loans.com.au and he suggested I can transfer my cash in offset into my Loans account and then re-borrow from there. I think that will mix PPOR loan and Investment borrowing and will make things difficult with calculation of interest.
I just spoke to Sales Manager with Loans.com.au and he suggested I can transfer my cash in offset into my Loans account and then re-borrow from there. I think that will mix PPOR loan and Investment borrowing and will make things difficult with calculation of interest.
The other thing to consider is when you make payments on the loan, how much is paying off the deductable portion and how much is paying off the non deductable.
Will they let you create a split?
messy
as ergo said
split the deductible portion out and create a daylight loan
ta
rolf
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