Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Mortgages – Tax Effective Investment for Contractors

215 views

Published on

Session One of our Tax Effective Investments seminar saw Richard Glynn of Plutus Finance discuss the benefits of using a Mortgage Broker, and also identified the various options and considerations when selecting a mortgage.

Published in: Business
  • Login to see the comments

  • Be the first to like this

Mortgages – Tax Effective Investment for Contractors

  1. 1. Richard Glynn B.Com
  2. 2. Why use a Finance/Mortgage Broker? • One subsidiary IN one subsidiary OUT • Need to view the Broker as a branch for all banks • Less expensive costs to run a broker business compared to Branch • Choosing client suitability from hundreds of products • This creates more competitive pricing /more choice • Servicability / Capacity To Borrow • The bank you choose compensates us for the introduction • Private Banking – costly, as they view superior service equals high interest rates and more fees.
  3. 3. Home Loans (Non–Super) • Owner Occupied Loans (Fees waived in first year. Includes off-set account. min $250k) • Major banks average (St George, CBA, NAB, Westpac, ANZ) $0 $100 $200 $300 $400 $500 Fees Fees ING Major banks (average $350 -$390 p.a.) 4.13% 4.28% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Variable rate Variable interest rate ING Major banks
  4. 4. Investment Loans • Increase in variable rates to above 4.6%p.a (up to 4.9%) for investment borrowing Recent APRA Legislation Changes has caused decreased demand for major banks appetite for investments loans Reduce maximum LVR • St George 80% • Macquarie Bank 80% • Nab 90% including Mortgage insurance • Liberty - Up to 95% LVR plus the full LMP fee capped (up to 99%) • Tighter credit guidelines
  5. 5. Loan Structures Fixed loans • Security of guaranteed rate for period 1-5 years (more at some banks, generally expensive) Variable loans • Flexibility • 100% off-set account Split Loans • How much fixed, How much variable? • Financial advise Interest only • Tax deductable for Investment loans • Less expensive than P&I • Good hardship fallback Principal and interest payment • Reduction of debt
  6. 6. SMSF Property Finance St George • SMSF residential Variable Interest rate 5.94% p.a. • Max LVR 70% • $12 monthly ongoing Liberty Finance • SMSF residential Variable Interest rate 5.49% p.a • Max LVR 80% • $10 monthly ongoing 0 500 1000 1500 2000 2500 3000 Setup Fees for SMSF include: $100 settlement $205 per additional trustee $1500 establishment fee $615 guarantor $0 $500 $1,000 $1,500 Setup Fees for SMSF include: $495 Setup fee $495 Processing fee Liberty Finance St George

×