I dont deal with CB- ie not licensed to sell or set up a CB.
I only can help finance the loan WITH a CB as part of the income.
no job = no loan ??
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I dont deal with CB- ie not licensed to sell or set up a CB.
I only can help finance the loan WITH a CB as part of the income.
Have you done any loans for clients with large substantial asset base portfolio's who have purely structured a Cashbond for increasing DSR ?
Yep.
If the client DSR is low or stating to hit the serviceability wall and they are cash up with good asset base we do offer a CB structure as a possible solution- However as mentioned to avoid conflict of interest we don't sell the CB but ask the client to seek separate independent advice on the purchase of the CB through the financial adviser that can offer them the CB to protect the clients interest.
There's many ways to increase the DSR, CB is one possible strategy.
Matter of ticking the right boxes.
- CBA
- NAB
- Suncorp
- Rams
Just to name a few.
But this will sound generic but it does depend on the clients asset base and "life cycle/ age" ....
I'm due to see an FA soon, it will be good to ask.
When I had the business, every spare cent was channelled into paying off an expensive loan (10.5% at one stage)- banks ignored the loan repayments, so servicibility was poor. When the business was sold, they also ignored the money I received, as it was a one off event.
I had asked my broker- who normally does an excellent job with investors and difficult structures- he was not at all keen on a cashbond structure, despite an excellent equity.
I had since forgotten about them, it's good to be reminded.
When I had the business, every spare cent was channelled into paying off an expensive loan (10.5% at one stage)- banks ignored the loan repayments, so servicibility was poor. When the business was sold, they also ignored the money I received, as it was a one off event.
I had asked my broker- who normally does an excellent job with investors and difficult structures- he was not at all keen on a cashbond structure, despite an excellent equity.
I had since forgotten about them, it's good to be reminded.
A CB structure is used for showing serviceability so as to increase borrowing capacity so as to increase your asset base & wealth creation in the portfolio acquisition stage. In this instance its primary purpose is as a tool to continue wealth creation. Its Not being used as a tool for cash flow harvesting.
^ did you have any other income to support the deal beside rent and possible CB only?
thats not what the poster wants from a CB, but whatever, I just think its a good idea to stand back and see the forrest before climbing back up the tree.
Rams treat self employed if rent is more than 50% of total income.
Not an FA - but from the advice i get from my own FA....
annuity/insurance bond/ cash bond can be used for a few reasons and has 2 function - Creation of wealth Or/and tool to continue wealth creation ( support)
- reduce tax ( superannuation ** commonly used by a lot of super advisors i been told)
- debt recycle
- Increase serviceability
- Wealth creation
- Cash flow
- Capital growth
- Asset protection
End of the day please seek independent financial advise as it's not for everyone!!!!
annuity/insurance bond/ cash bond can be used for a few reasons and has 2 function - Creation of wealth Or/and tool to continue wealth creation ( support)
- reduce tax ( superannuation ** commonly used by a lot of super advisors i been told)
- debt recycle
- Increase serviceability
- Wealth creation
- Cash flow
- Capital growth
- Asset protection
End of the day please seek independent financial advise as it's not for everyone!!!!
What about if they are not 'cashed up' but still have a very good asset base and use funds to purchase a CB from their LOC's?
Yes, but also dodgy for the banks. $400K vendor finance for the business, 10 years @8.3%.
are you saying the assessment could include the likely CB income which is purchased with the loan funds? like using the likely rental from an investment property purchase? I doubt this is possible. The best I have been able to do is to use the 'deeming' rate for borrowed funds which are to be used for future investment. this along with the negative gearing helps marginally with skinny deals.
May need to re-read, it is what the poster wants. The OP wants to purchase another property but doesnt meet his banks DSR to support the borrowings to do so.
But still, good advice to sometimes step back so as to view the forrest from the trees.
That's ok.
The only reason i say "cash up" if because i get calls from ppl who has reached their serviceability limit and then wants to carry out a CB structure but don't have cash/loc to purchase and just presume they can use equity
But end of the day i personally will only touch CB with at-least ONE tax return as a min or 2 depending on the deal; never for newly set up CB.
AHah i probably understand why your broker said no...vendor finance + CB
Rent plus vendor finance adds up to a livable income. The tax department counts it all, but the banks, very little.AHah i probably understand why your broker said no...vendor finance + CB
That's ok.
The only reason i say "cash up" if because i get calls from ppl who has reached their serviceability limit and then wants to carry out a CB structure but don't have cash/loc to purchase and just presume they can use equity
Yes, you hit the nail on the head.
One needs to have the foresight to have sufficient funds (cash/loc etc) set aside in advance prior to hitting the DSR wall otherwise they will find themselves in a catch 22 situation having painted themselves into a corner.
This is why I have said property investment is not about property, rather its about finance.
Property is merely the vehicle being used as security to continue accessing borrowed funds whenever you want - for investment, business, or lifestyle purposes.
