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FAQs

Frequently Asked Questions:

What is Loan to Value Ratio (LVR)?

LVR is the percentage you can borrow in ratio to the value of the purchasing property.

What is Lender Mortgage Insurance (LMI)?

LMI is designed to protect lenders from the risk of providing a higher loan amount. LMI payable usually increases as the LVR and loan amount is higher. However, LMI does not apply to our non-resident product.

What is the benefit of an offset account?

An offset account is a transaction account that is linked to your mortgage. The amount in your offset account allows you to offset the amount you owe on the loan without physically repay it. Therefore, by depositing into your offset account, interest will only be charged on the difference between your loan balance and the amount you have in your offset.

What is negative gearing?

Negative gearing is when cost of owning an investment property exceed the income it produces, in another word, the shortfall of the investment property. However, this shortfall will enable you to offset it against your other income, allowing you to pay less tax on your overall income.

What kind of tax benefit will I receive from investing in property?

By investing in properties, it will allow you to claim tax on all most of the expense for your investment property including maintenance expenses, property management fees, body corporate etc. You may also conduct a depreciation schedule to receive tax depreciation on plant and equipment and building allowance up to 40 years. Negative gearing is only applicable if your have a shortfall on your investment property, it is to offset against other income for paying less tax. Please seek consultation from your accountant for more information.

More Information: https://www.realestate.com.au/advice/property-depreciation-101/

What is a depreciation schedule?

Depreciation schedule is a report set by the Commissioner of Taxation. The schedule contains the expected depreciation amount on your plant and equipment and Building up to 40 years. It is only required to produce once by a qualified quantity surveyor after inspecting your property. The claims for depreciation can be backdated up to 2 years and the schedule itself is tax deductible as it is considered as an expense on your investment property.

What is comparison rate?

Comparison rate allow you to work out the true cost of your loan by taking fees and charges into account. It allows you to compare different products from different lenders to find out the actual cost of the loan.

More Information: https://www.moneysmart.gov.au/borrowing-and-credit/home-loans/interest-rates/comparison-rates

What is stamp duty and how much do I have to pay?

Stamp duty is payable to the government when you purchase a property in Australia. The amount is based on valuation price or purchase price of the property, whichever is greater. Due to the rate of stamp duty in every state and territories are different, please refer to the stamp duty calculator provided below:

More Information: https://www.nab.com.au/personal/loans/home-loans/home-loan-calculators/stamp-duty-calculator

What insurance do I require for my investment property?

The three main insurance that we recommend to landlord are landlord insurance, building insurance and content insurance. Landlord insurance protect your rental investment from damage or loss made by the tenant. Damage and loss such as theft/burglary by tenants, damage or vandalism by tenant, loss of rent due to tenant default or legal expense require to evict a tenant. Building insurance covers the permanent structure of the building such as bricks, ceiling and floor. Content insurance is not essential unless your rental property is furnished.

More Information: https://www.realestate.com.au/advice/common-household-disasters/

What is a First Home Owner Grant?

The First Home Owner Grant (FHOG) is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria. The amount you receive for your FHOG is dependent on the state/territory you are purchasing.

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