Q: My friend is starting his mortgage broker business. He is planning to buy a car. Should he buy the car on ABN or personal and claim deduction for business use?
A: Hi Rakesh,
The commercial car loan rates I have access to are usually cheaper than the consumer car loans.
However we do require 1 year ABN and GST registration for the lower commercial/business interest rates.
Q: I have two ABNs - a sole trader and a company. Same business, one followed the other. Do invoices issued under the first ABN have to be accounted for in the BAS for that entity, or can they be shifted to the company BAS if paid after it was set up?
A: Hi Todd,
I'm going on a tangent here.
I suggest that maybe you hold onto your sole trader ABN and don't cancel it until your Company has been running with GST registration for 2 years.
Since your self employed; financials are not always up to scratch. Lenders usually require 2 years GST registration if applying for a Low Doc home loan or business loan.
Just food for thought if you are thinking of borrowing soon.
Q: How come when borrowing money using the equity in my property to invest in shares the interest rate is different to that of my home loan?
A: Hi Wayne,
Assuming this is your owner occupied property:
Because you have told the bank that you are topping up your home loan for the purpose of investing in shares.
That portion of funds you have drawn out will now fall under "investment" and be charged at an investment interest rate.
Q: I would like to buy my first property in the next few years. Should I aim for a 10 or 20% deposit?
A: Hi Marc,
Are you planning to buy a 2nd investment property?
If so, how long has it taken you save this deposit so far? Wouldn't it be wiser to place 10% on this one so that you can get your next investment property with another 10% deposit? Getting into the market quicker.
If your not aiming for a 2nd investment property. You are probably better off saving for a 20% deposit and avoiding LMI.
hope that helps
Q: When borrowing off a financial institution, what are the advantages & disadvantages of borrowing your maximum and using an offset account type set up?
A: Hi Micheal,
advantages: You havent sunk your money into the loan. Your funds are available in an offset and you can use it to increase your investment portfolio by putting towards another property.
disadvantages: you'll generally pay mortgage insurance above 80% LVR. Interest rate may be higher above 80-90% LVR depending on lender.
So it's a choice based on your risk appetite and how quickly do you want to build your investment portfolio?
Q: Do all lenders for a home loan require that your deposit be made up of savings or can it be part or full cash?
A: Hi Bill,
When lending 80% LVR/using a 20% deposit some lenders will not ask to see the source of funds, bank statements etc. to verify funds for completion. If you have cash stuffed under your pillow you could make a full cash contribution to the loan account before settlement date.
Q: Are there any free workshops available in Sydney that provide information on how to set up and run a small business?
A: Hi Lauren,
You can also try meetup.com that has many small business oriented groups that are free to join.
Q: Are there options for being a guarantor to help your kids buying their first home for only part of their loan, say for the deposit only, instead of their whole loan?
A: Hi Lou,
A family/pledge or guarantor using up to 20-50% (depending on lender) of the equity in your home can be used to cover your kids deposit. Effectively borrowing 100% of the property price. They can go even beyond that and finance stamp duty if you have enough equity in your home.
Q: Has anyone used a P2P lender to obtain a personal loan? If so, would love to get your feedback on the process and how the loan compares to other providers
A: Hi Paul,
I have offered finance to clients via a p2p lender and lent my own money through a p2p lender, finding the process to be very smooth.
Clients enter their details online, they then choose their bank and enter the account number and login details through a secure gateway. The p2p lender can then analyse their bank statements and they usually have a turnaround time of up to 24 hours.
The rates on loan are offered against the customers risk profile and they can get lower rates than your average bank if overall score is good. Everything is transparent with breakdown of fees, total repayments, etc.
I also feel confident about lending my money through the platform as well to earn a return. The p2p lender checks are quite stringent requiring a minimum Veda score and as you can imagine picking up every liability and savings habits about the customer through their bank account
Q: If I'm buying my first property do I still have to pay mortgage insurance if I have less than 20% deposit?
A: Hi Jacob,
If you are a medico, lawyer or accountant some lenders will allow you to borrow up to 90% without paying mortgage insurance (LMI).
Some lenders will do 85% LVR (loan to value) without LMI under certain circumstances.
Also there is a special for first home buyers to capitalise the LMI onto the loan upto 97% LVR again under the right conditions: ie. acceptable security.
You could also do a family pledge using up to 50% of the equity in your direct family members property to cover your deposit. Effectively borrowing 100% of the property price and even finance stamp duty if they have enough equity in their home.
Hope that helps,