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Q: We are not having much luck with the banks for the fit out of our cafe. A broker has mentioned a lender called Prospa - never heard of them so does anyone know much about them?
A: Expensive. Have your accountant work out the annualised interest rate... And then have a stiff drink. Check out Silver Chef for equipment and custom stainless, cheaper than prospa and likely better suited. Your equipment dealer should know about Silver Chef.
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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: Risk of loss is different. Also banks just can and do and people just pay so why cut your nose off to spite your face bankers would say.
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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: Depends if he will do a lot of business kms. Also where he will get most benefit with deductions. Company tax rate may be different to his personal one. There's also FBT issues I expect. Really a question for his accountant to advise on.
Rakesh Basavaraju
9 years ago
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Q: I am a franchisor. New franchisees need to pay between $20k and $35k to join the group. What's the best way to arrange to finance this fee as a new franchisee?
A: I assume you aren't accredited with a bank. So from cheapest to dearest, loan against real estate, personal loan, credit card, vendor loan, friends, family. The other option is to partner up with someone who has money and is willing to take a minority stake. If it's a food franchise there might be options with Silver Chef, ask your equipment dealer or link up with me at LinkedIn and I can provide information.
Jonathan Sharp
9 years ago
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Q: If you have a variable home loan and interest rates increase, does your repayment amount stay the same and just the interest portion of the repayment amount increase?
A: If rates go up so does your repayment so you pay off them loan in the term agreed to. The ratio of capital to interest may remain the same but interest increases.
Bill Vasiliadis
9 years ago
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Q: I'm looking at buying a franchise, is it best to pay cash or obtain a business loan?
A: Depends how much cash you'll need for working capital. You should not borrow heavily for working Captial. As a former franchisee of 9 years and I work in the franchise industry now managing over 50 franchise systems, trust me, working capital is critical. Your most important investments will be quality staff and local area marketing. Franchise lending is cheap from banks these days so not as big a concern. Link with me on LinkedIn and check out my blogs about franchising might help you,
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Q: If I move out of my home and rent it do I need to refinance with an investor loan or can I keep the mortgage I currently have?
A: No. Keep the loan you have if you're happy with it. You may just want to call a broker and ask if you can convert to Internet only.
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Q: Hi what is the best most cost effective way to remove a person from a mortgage? Currently joint tenants but wish to pay out ex an agreed amount and hold onto the property? I understand there is stamp duty payable to completely remove them from the mortgage
A: You should find that under the family laws there are concessions in stamp duty and other costs to settle matrimonial property (in the case of divorce). My advice talk to family lawyer. Many will give you some free advice.
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Q: Should I stick to an interest only loan for an investment property?
A: Whats your strategy with the investment? Did you buy it to hold long term, pay it off and live off the rents? Did you buy it to renovate increase value and sell? I think the answer to your question is clear after you answer yes or no to these ones. Paying IO is efficient. Paying off the capital isn't increasing its value it's only reducing debt (think about that). Only the Interest is tax deductible. If you are negative gearing then ask yourself this question. Is the capital value increasing. Every year at a faster rate than it's costing me to keep it (after allowing for tax benefit)? If the answer is no then I ask again, what's the strategy?
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Q: Is cross-collateralization good or bad? e.g If I go with cross-collateralization, one of the bank is offering me consolidation of 4 of my loans which are currently with 3 banks and at a better rate. Should I take that offer?
A: Yes and no is my answer. Again as I always say in my answer on Echo, what the strategy? If you have no strategy and fell into a situation you have then what's the downside is the next question you ask yourself. Rebecca is right that if you sell it might trigger a revaluation. But make sure you have every loan with a different bank. I don't believe 4 separate loans with the same Lender is any smarter than all in one bucket and cross linked. If you're investing it then boils down to access to equity. If you have loans with separate banks accessing equity is painful. You end up with many small 'deposit' loans and it can become a mess. I decided to cross link with one bank for 32 houses I bought over 3 years because I needed one relationship and after 15 houses there wasn't enough lenders anyway. The great benefit to me was speed to access money. Having a portfolio manager meant she could access equity fast in my other properties at zero cost. Again, build your strategy first, then your structure, then the solution is clear and obvious S-S-S.
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Q: I want to open my own cafe but would need to borrow the money for the fit out. Is it possible?
A: Yes, there are specialist hospitality funding companies that do that. Most commercial finance brokers know them. Alternatively most equipment dealers have options.
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Q: I am selling a business, is there an effective way to minimise capital gains tax?
A: Okay, this is a question for an accountant. But here is my 2c. If you sell after 12 months since purchase date (date your business sale contract) then you may be eligible to 50% off the CGT. Same as property investment. There are rollover provisions if you are selling to buy another business which allows you to defer CGT but that's detail you need for an accountant. If you claimed al the expenses incurred to buy the business as operating expenses than your CGT is usually higher it's call grossing up your cost base. If you didn't then your CGT might be less than you think. If you have a lot of equipment then value that as high as possible because CGT isn't levied on that value, mainly only the goodwill component. Then there's trusts and distributions etc... List goes on. See your accountant mate.
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Q: Are smsf a good investment?
A: SMSF isn't an investment. It's a way to invest for your retirement. The underlying asset the SMSF buys is in most cases exactly the same as if you bought shares outside SMSF. Do your question really is, is investing via an SMSF smart? That answer depends on what the objective is, how many years to retirement and how much time, skill and desire you have to be your own fund manager. My advice is talk to a good financial planner before spending money on an SMSF to have these questions answered first.
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Q: I work full time as a floorsanderer and want to buy a houseboat to rent out. I have a 50k caravan that I could sell for a deposit & about 10-20k in savings. I need about 250k all up for the boat. No house as security. Can any1 help? I expect 50k+ income
A: It would need a really good negotiator (broker) to sell a bank on a houseboat. Here's the main issue. Is the berth freehold? Doubt it. Are there restrictions on resale of the berth? Probably. The asset isn't really the houseboat, the asset of value is the parking spot it sits in. Perhaps as a chattel lease, much like buying a recreational boat but that'll be expensive finance for a primary residence. Banks do lend on leasehold but usually perpetual leasehold for buying residences. The positives are there is an income stream so talk to a good mortgage or even a commercial broker and find out if any lender has an appetite for this deal. Good luck.
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Q: What are the advantages of a self managed superannuation fund and is it easy to do?
A: Wow that's a big question. For details you need to speak to a licensed advisor but for broad general why do it answer. Because you think you can invest better than a professional investor or you want to buy your business a premises are the two main reasons most people do it who don't have millions in super. If you think you can invest better ask yourself do I have the time to do it?
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Q: Unsure if my husband and I should take out life insurance and what institution should I approach?
A: Unsure because of cost? That'd be the only sensible reason to hesitate. The cost of no insurance is much greater and not just financially. Being insured means you don't compound a tragic event in your life by placing at risk your home, you relationships what health you have left (through financial worry) or your retirement savings. Talk to a good financial planner about which insurer is best for you.
Antonella Samperi S
9 years ago
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Q: Can I purchase a car through my business and claim the repayments?
A: The tax office is more concerned to know what you are using the car for? If it's for business use, yes you can make a claim subject to rules. If it's owned by your company and there is no business use its not so easy. This is a complex area in tax so an accountant is who you rely on for advice.
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Q: I have a couple of investment loan and understand the bank has increased the interest rate - can you tell me why?
A: Short answer is because contractually they can. Long answer is because other banks have, so yours doesn't want to miss out on making more money, cash rates or the money they buy from the money markets is more expensive, credit squeeze or supply is tight.
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Q: I run my own business and a mate of mine suggested I speak to someone about debtor finance - can you give me an idea of how it works?
A: The other answers explain it so won't rehash. What makes it hard to get debtor finance- concentration in too few debtors, unsuitable debtors, bad credit management policies of practices on your part. There is an expanded answer but best you talk to the Commerical finance brokers.
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Q: If a financial institution calculates interest daily, is it only business days? Is this the same for deposits as loans?
A: 7 days a week. Yes it's the same. You enjoy the benefit of the banks capital 7 days a week (loan) and they enjoy the benefit of your money 7 days a week.
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Q: 4 months ago we purchased an existing home, which we want to do some work to. When is the earliest we can request a refinance with our Bank?
A: There is no minimum time, what you want to know is when does it make sense to increase your loan to pay for the renovations. Answer if you started with plenty of equity then your just re-bowering back some of deposit money. If you started with minimum equity or you borrowed 90% then ask yourself this question, will the renovations increase the value by enough to maintain 90% debt to value? If no, then it's not the right time.
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Q: How do interest only periods work, if I've been putting money into an offset account, when the interest only period is over do they just charge you principle and interest on the difference between what's in your offset account and the loan amount?
A: Interest free periods only apply to credit cards. You're talking about a mortgage loan. I don't known of any interest free mortgages? If yes, I want one! Answer is yes interest is on the net balance of the loan as you said. What you want to know is How you pay off sooner by doing this. Answer is to maintain the repayment, it's just that less of that repayment amount is interest. Think running up a hill wearing roller skates, that's a mortgage. With offset, the hill isn't as steep.
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Q: I am about to sell a house and will come in front by about 200k, should I rent for a bit and see what's happening and save or should I be looking to buy straight away? I have heard of the saying buy n sell in same market although don't really know
A: Yes if buy and sell in the same market and same suburb you can say bye bye to your windfall. That assumes you want to live the same standard. If however you find another emerging area you think was your suburb 10 years earlier then you buy again move and tough it out in the less than hipster suburb and ride that wave up to make another double tonne.
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Q: When selling a house what are the costs involved besides real estate and legal?
A: Costs... I assuming this in not an investment house.
Marketing subsidy if you advertise the sale, Mental Health because it will drive you nuts, removals company to shift your stuff,
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Q: I'm thinking of buying a holiday house. Is there a way to make it a negatively geared investment property?
A: Don't ever call it a holiday house is a first step. Then make sure you lease it for most of the year to an permanent renter and always have it listed for permanent letting. Do this and you might be a chance.
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Q: Hi, I am purchasing an investment property with my wife and my brother and his wife. Will the bank insist we have one loan with one bank? Is there other things i should be aware of? Cheers, Forbes.
A: The bank may insist because it's easier for them but may not be right for you. Assume it's only one property as security. If that's the case and you have one loan you need to cross guarantee each other so the mortgage is binding. That's the same if you have 2 loans on the same property. With 2 loans though you can keep and eye on your part but all of you are 100% liable for all of the debt not just your share.
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Q: If i sold an investment property at profit will taking on a new investment property loan in the same financial year help minimise my cgt?
A: Very unlikely. If you could, that would encourage rampant property trading and a property bubble.
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Q: I have just finished university and have come up with some business ideas in which I would like to pursue. The issue is that I have minimal finances in order to get the project off the ground. What are some of my options?
A: Test to see if there is sustainable demand for your business first. If you can show there is demand, money will find you.
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Q: How can I look at a broad range of home loans to work out which is best for me? I really want to compare more than just the interest rate ?
A: Talk to a couple of brokers.
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Q: Hi there. Trying to work what makes more financial sense over a longer period ...paying out a higher interest personal loan with withdrawing cash currently sitting on my house mortgage OR leaving the $$ on the mortgage? The interest rate is 12% v 4.95%
A: If its financial sense you want. Work overtime or a second job and pay off the personal loan faster with the extra income.
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Q: Do you think that the federal government will abolish the tax concessions that encourage negative gearing? If so, under which conditions or scenarios do you think they would do so?
A: The LNP won't do it. Too many politicians with big investment property portfolios. Keating did that in the 90s and it was a bad move politically. They might tweak it but they'll increase GST before they rob Peter to pay Paul.
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Q: I have a personal car loan and interest free store cards, shall we consolidate with our home loan? Or continue to pay all separately?
A: If you can't afford your personal debt and you can't make lifestyle changes to afford it then better to consolidate than risk credit default or poor payment history on your credit file.
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Q: Novated lease versus personal/car loans...what are the pros and cons and does one make more financial sense than the other?
A: Novated your employer pays costs while you remain employed. Personal loan you pay and usually from after tax income.
