LOC Features the M. Lomas way

[AlexE]

Going thru M. Lomas book "How to Create an Income for Life" she describes about 10 features an LOC should have and I was wondering if any of the forumates tried it.
My LOC certenly has not all of them and if I want to increase the amount I will have to refinance, wich means more application fees etc etc.
So if anyone has all these features on their LOC can you pls tell us about it and also the lender if possible.

Alex

 

[geoffw]

Alex,

I would guess there's not many of us who have read the book.

Can you give an example of some of the features please?

 

[AlexE]

Well some of the features, I would like to have, are: Ability to increase your limit without needing to refinance, the ability to add extra accounts as you need them and the option to add or release a security without having to rewrite the loan, wich I think saves you a lot of money on the long run.

Alex

 

[Rolf Latham]

Hi Alex

You will find the trickiest one for most lenders is the top up option and the multiple accts.

Portability of security is a pretty standard thing these days.

Many of these features cost some big money, for eg is it worth it to have the option of 10 subaccts at 10 bucks a month each if the interest rate is .6 % more than the product that only has 2 splits ?

ta

rolf

 

[AlexE]

Hi Rolf

So you mean to say that to have these options it costs extra?

If so, they are not there to save us money but to make money for the lenders.

Alex

 

[Luke]

G'day Alex,
In one of her occasional emails about 5 months ago Margaret finally actually nominated a couple of products, and specifically noted that the St.George LOC was still the one that almost everyone in her office used.
BUT, as Rold has already said (and explained to me) it's very expensive. I don't get why she would want to pay so much more, but she's welcome to her opinion.

I guess the real lesson is, ALWAYS go to an independant mortgage broker (Like Rolf) who can talk you through all the options and choices, and explain the pros and cons of what might suit YOU best.

Regards
Luke

 

[Donna L]

Just continuing on Margaret Lomas, I recently read the book and some things make sense but her positive cash flow property (after tax) would surely not be postive cashflow once you stopped working or retired because there would be no tax concessions - confused by this. Anyone operating on her model?

 

[AlexE]

G'day Luke

Thank you for clarifing it for me. At the end of the day I will do that very soon.

So...Rolf, can I send you an e-mail with all the details for your expert opinion? Pls let me know.

Regards

Alex

 

[Rolf Latham]

Hi AE


Anyone is free to send me mails , but what they get back may not be expert opinion..

An old sales trainer once told me that x is an unknown quantity and a spurt is a drip under pressure.

My opinion is merely the previous (but accumulated) experience of lots of other people.

ta

rolf

 

[Sim]

Originally posted by Donna L
Just continuing on Margaret Lomas, I recently read the book and some things make sense but her positive cash flow property (after tax) would surely not be postive cashflow once you stopped working or retired because there would be no tax concessions - confused by this. Anyone operating on her model?

You are correct Donna... the concept of "negatively geared but cashflow positive", is dependent on tax deductions to make it work. If you stop working or your income effectively drops to a much smaller level, then this can have a devestating effect on your cashflow from the properties - but non-cash deductions such as depreciation can still help I think.

That being said, over time the properties would often tend to become cashflow positive in their own right, so they will help to manage any shortfalls.

Overall it's not a bad strategy if you have a stable job with a decent income and intend to work (even part time) for quite some time while you are building up your property portfolio.

Personally I don't like this strategy because it does not fit in with my goals - but that's a personal thing only - YMMV !

 

[bryan]

Hello AlexE

I agree with Luke, contact a mortgage broker, ie like Rolf.

Regards
Bryan