Hi Richard could you please explain this in a little more detail? thanks
Quick question(s) for the brokers
- Thread starter Roosterman
- Start date
Hi Richard could you please explain this in a little more detail? thanks
It's a unique way of borrowing money from the back/ offering security.
Your offering a team deposit ( of $xx) as 2nd security + the place your purchasing - the bank lends you 100% cash finance, but they will hold your cash term deposit... until the value of the place goes up and you have enough equity to release the TD.
It's a cleaner way of separating your cash and another possible way of doing a clean equity release.
Regards
Michael
Your offering a team deposit ( of $xx) as 2nd security + the place your purchasing - the bank lends you 100% cash finance, but they will hold your cash term deposit... until the value of the place goes up and you have enough equity to release the TD.
It's a cleaner way of separating your cash and another possible way of doing a clean equity release.
Regards
Michael
Thanks Mick will look into it...
Your situation sounds not dissimilar to mine....High income $200k+; good servicibility record, other income producing assets etc. I bought a PPOR on an interest only loan 18 months ago . My rationale for going down this route was that , because the property will one day be an IP, I wanted as much borrowings on this property as possible and to maximise what I could put in my offset account until such time as I bought a more permanant PPOR.
However my bank , Westpac, would not lend more than 80% without either LMI or by quarantining part of my savings into a term deposit and using that as security for any shortfall above 80%. Obviosuly the latter option would mean the interest payable would be less competitive than the offset account interest credit and give rise to increased taxable income while the former option meant steep LMI, so I paid the 20% deposit and avoided the LMI at the expense of the loss of a future tax benefit. I think that was the most sensible option.
Seems the banks will go higher than 80% LVR again
However my bank , Westpac, would not lend more than 80% without either LMI or by quarantining part of my savings into a term deposit and using that as security for any shortfall above 80%. Obviosuly the latter option would mean the interest payable would be less competitive than the offset account interest credit and give rise to increased taxable income while the former option meant steep LMI, so I paid the 20% deposit and avoided the LMI at the expense of the loss of a future tax benefit. I think that was the most sensible option.
Seems the banks will go higher than 80% LVR again
> 80 % will still require LMI if you want a decent rate AND interest only, or a bunch of other weird conditiosn
Case by Case, for someone on a high taxable income bracket, the payback period on an 88 % lend isnt that "long", plus for many the challenge or opportunity cost of the 8 % is something they dont want to do without.
The 100 % lend using TD is best reserved where
1. We have fast organic growth ( and evidence of same)
2. You know you will adding value to the property so the TD can be released
3. You are doing a subdiv and can break the TD up after a sale
ta
rolf
