Cash Bonds / Annuities

[Chomp]

Http://www.challenger.com.au/default.asp

Can I use this to boost my income and get a loan over the line ? or do lenders not classify this as income ?

I want to do a triplex but I also want to do an extension on my house at the same time, I dont think I would pass the servicing, so I'm thinking;
1. Set up LOC
2. Purchase annuities
3. Secure triplex block / builder, arrange finance and start the build.
4. Cancel annuity and then use the LOC to do the extension

 

[Colin Rice]

Here is a recent thread on the concept of using Cash Bonds / Annuities for serviceability purposes.

http://somersoft.com/forums/showthread.php?t=92525&highlight=rixter+cashbond

 

[Chomp]

Thanks FMS, I did read that one, the question wasn't really answered though as to whether lenders will generally accept it etc...

Can anyone provide more details of lenders, how long you need to show income and percentage of approvals v applications using it ?

I dont want to set it all up, wait for 6 months to show income, then find I cant get the finance, this would annoy anyone I'm sure.

Chomp

 

[Colin Rice]

Going of memory Westpac where the go to bank for this strategy and they required 3 months history. It is contanined in one of the posts in the attatched thread.

 

[Rolf Latham]

Many lenders will accept annuity income where it can be shown that the pension will last for more than 5 years.

Under NCCP however, at least as a broker, youd want to find an exit strategy for your client to make the house of cards work on paper after the "smoke and mirrors capital ration ends or is ended".

While I appreciate that personal serviceability, and lender serviceability can be very different in both directions, I havent recently come across many transactions that cant be got across the line without either relying on real income OR being compliant with the NCCP, where the asset to be built or purchased was to be held

ta
rolf

 

[see_change]

There was much debate about cash bonds in the early 2000 with a couple of long posts including this one .

http://somersoft.com/forums/showthread.php?t=14486&pp=15&highlight=Disaster&page=3

I had concerns about cash bonds which were mainly addressed on page 2-3 .

The reality is that since then we had period on low or negative growth since and some people have had negative outcomes . I'm not sure how much of this was as a result of cash bond ( I think not much ) or other schemes .


Cliff