Just starting off, is our loan structure right?

[Olive]

Still new to the forum and new to property investment. Really need some advice....pls pls pls

Partner and I both renting at the moment. Partner earns $50k (PAYG) he runs his own business registered as a Pty Ltd and has been in the industry over 2 years. I am a normal employee for another company earning $75k. We plan to buy our 1st PPOR and 1st IP asap (even get both done at the same time is ok). We have $90k saved up. We are aiming at a PPOR around $350k-$420k in Sydney. IP around $250k-$300k in VIC.

Since partner is self-employed (possibly pay higher rates?) we have decided to get 2 separate loans, both properties will be under both names. I will take the bigger one (PPOR) and he takes the smaller (IP). I already had a ANZ 'break free' loan pre-approved last month and partner is going to get his from 'Myrate'.

Our problem/question is: not sure if this is the right structure to go? And also are these 2 lenders the right lenders for us? We don't seem to have solid reason why these two lenders...probably just want 2 different lenders to reduce the risk, also 2 different type (bank and non-bank lender) let us experience both. ANZ's breakfree package charges $340/a. comes with offset account and c. card. We will be putting all savings into this offset account to help save on interest since it is a PPOR interest can't be claimed.

What if the IP loan also comes with an offset account? Which offset account would you put the money into? PPOR or IP?

If we do only IO on the IP, say bought is for $250k in 2008 refinance after 5 years, say market value in 2013 is $350k, what equity would we have? Just not quite understand the ownership of it if have only been paying IO... the bank still has 100% ownership of the IP isn't it? So even if you refinance, the $100k increase in value goes to the bank or to us?

Our other worry is that partner's company has full doc for the past 2 years but not making profit yet. Just enough for out goings and wages for employees. If he go for a full doc loan, would it be approved ok? Or would the lender be looking at profit to determine the risk factor?

Lastly, our biggest biggest biggest headache is that we are getting married this Dec.... and we both agree and not want to waste money on wedding or honey moon... We even thought that if we bought the IP vacant in Dec we just go stay there in VIC for holiday etc...

Sorry for so many questions, hope to get some answers soon. Seems running out of time for everything. Thank heaps everyone.

 

[Rolf Latham]

Hiya Olive

Thems a LOT of questions that need to be answererd.............................

While you have provided a lot of data, its is unfortunately peripheral and provides little of the soft data that a client provides to say a broker so the broker can help them along the way.

Some immediate things

Breakfree is an umbrella Package, its like saying aI boought a Toyota.............they start from the little wee cars right through to v8 wds.

MyRate.................its a mortgage managed product, check the exit fees.

Id also address the both names on both properties bit...................... from an asset protection, taxation and future borrowings purposes.

Good news here is though I have followed your previous posts and you are moving forward !

PLEASE talk with a good independent mortgage broker, and a smart structuring accountant like NicK M at

www.strategicwealth.com.au

ta
rolf



ta
rolf

 

[jasperjue]

Still new to the forum and new to property investment. Really need some advice....pls pls pls



Since partner is self-employed (possibly pay higher rates?) we have decided to get 2 separate loans, both properties will be under both names. I will take the bigger one (PPOR) and he takes the smaller (IP). I already had a ANZ 'break free' loan pre-approved last month and partner is going to get his from 'Myrate'. - Partner with the highest income should get the loan for the IP as they can take advantage of the tax breaks

Our problem/question is: not sure if this is the right structure to go? And also are these 2 lenders the right lenders for us? We don't seem to have solid reason why these two lenders...probably just want 2 different lenders to reduce the risk, also 2 different type (bank and non-bank lender) let us experience both. ANZ's breakfree package charges $340/a. comes with offset account and c. card. We will be putting all savings into this offset account to help save on interest since it is a PPOR interest can't be claimed.



What if the IP loan also comes with an offset account? Which offset account would you put the money into? PPOR or IP?-

If we do only IO on the IP, say bought is for $250k in 2008 refinance after 5 years, say market value in 2013 is $350k, what equity would we have? Just not quite understand the ownership of it if have only been paying IO... the bank still has 100% ownership of the IP isn't it? So even if you refinance, the $100k increase in value goes to the bank or to us? -

Our other worry is that partner's company has full doc for the past 2 years but not making profit yet. Just enough for out goings and wages for employees. If he go for a full doc loan, would it be approved ok? Or would the lender be looking at profit to determine the risk factor

Lastly, our biggest biggest biggest headache is that we are getting married this Dec.... and we both agree and not want to waste money on wedding or honey moon... We even thought that if we bought the IP vacant in Dec we just go stay there in VIC for holiday etc...
Sorry for so many questions, hope to get some answers soon. Seems running out of time for everything. Thank heaps everyone.

1) lenders smenders...any of the big banks are pretty much the same over the long run. Until we get some competition in the market place there won't be much difference.

2) offset into the PPOR at all times

3) the bank only wants its 250K back plus the interest it charges to rent that money to you. You have the 100K equity in your example

4) they are looking for ability to repay the debt. if there is no money left over from the business to repay debt then they will look for spare money. doesn't sound like theres much spare so could be a problem

4) yes marriage is a big headache. good luck with that.