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Investment loans

Hi everyone
Been offline for quite a while but back now.

I have a question for all you finance savvy Fatcatters out there.
I have 2 investment homes. I am thinking of refinancing as our bank isnt giving us discounts on fees etc. We took out a $400000 loan last year and the best they offered us was waiving the $300 app fee. The fees on our accounts average $100 per month and they waste no time in putting up the rates. I don't mind the rates so much as they are investment tax deductable etc etc but even so, tax deductability is'nt the be all and end all and saving $200 per week would make our lives better.
I have worked out that if we consolidate the investments into 1 loan, we will be saving $60 p/m on fees and $200 per week in interest. We will never live in these 2 homes and intend to hold for anther 5 years or so.
Is this a good idea? How much would it complicate the tax paperwork and is it possible?
Any suggestions?
Have a good one :)

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Permalink Reply by Bandwidth on December 27, 2009 at 10:39

Hello again nikki

Reading your comments on cash flow I remember sosmething I was told and like to pass on. "In property investment the first 3 years are hard and it takes seven years for the light to appear at the end of the tunnel."

Some people with large portfolios do not have a life, otrhers get to the point where the portfolio fuels itself. Once properties become revenue neutral they very quickly become revenue positive. Once this happens, if you decide to stay employed, the portfolio grows to maintain your projected outgoings and financial goals.

If you are disciplined enough, when you restructure your finances look at taking out an equity loan to cover cash flow lumps and bumps. This loan should not be used to purchase luxury items, that is the discipline.

There are legit ways you can use business (property) cash flow to reduce personal debt eg home mortgage, car loans etc. Thouigh this is not the venue to discuss those sorts of things

I am not a financial advisor I am just someone who has learnt along the way.

Questions
Have you had a depreciation report done on your properties and are you claiming depreciation
Are you claiming your tax losses against your income or only at the end of the year, this can have a major impact on cash flow.

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Permalink Reply by Vonny on November 21, 2009 at 20:37

Hi Nikki,

I was personally enquiring about mortgages lately and i know that at st george they have a product call the "portfolio loan". You can have each section of the loan (they call these sub accounts) applying to a different security (e.g. different properties or different types of investments like shares etc). Each sub account can have different rates i.e. fixed or variable, and each sub account comes with a separate statement to make tax life easier. If you combine this with the advantage package (i.e. the "professional package" that bandwidth mentioned) you pay $395 per year and any accounts, credit cards etc at st george are fee free plus they give you 0.8% off the portfolio loan variable rate at the time (i think there's a discount on fixed rates as well but i wasn't asking about those). I was just told that with the advantage package, it's $100 for legal fees to set it up and that is it. The disadvantage of this loan is that they only make the interest payments compulsory so if you aren't disciplined with your money then you can get into a bit of trouble.

portfolio loan
http://www.stgeorge.com.au/loans/home-loans/invest-in-property/port...
advantage package
http://www.stgeorge.com.au/loans/home-loans/invest-in-property/adva...

i'm guessing other big banks might have something similar so you can shop around and see if something like that suits you.
p.s. i'm not affiliated with st george, only considering them for my own loan.

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