A Random Person’s Random Investments

February 18, 2008

lHow SubPrime Really Works

Filed under: loans — arandomperson @ 10:26 pm

How Subprime Really Works – found via MeFi

yes a bit of a lazy blog link to a comic but funny.

July 5, 2007

Went with Ratebusters for the loan.

Filed under: loans — arandomperson @ 1:33 am

We just got pre-approval for a home loan with ratebusters. Essentially as they are cheap in the long term – though there is a bit of a fee hit in the short term I think it is worth it. Also they were the most helpful (both talking with them and the general information available on their web site) and the “up to 10 splits after settlement” feature combined with the 100% offset best meets what I am trying to do with investment plans.
Now the hard bit of actually looking for a place.

June 6, 2007

so far ratebusters.com.au meets my needs, best so it seems

Filed under: loans — arandomperson @ 2:01 am

Well after asking about it looks like how I was hoping it worked is not quite how it works (I guess that would just be too easy for me).. but there are a few close approximations.. ratebusters has relatively low interest rates, a line of credit facility, and up to 10 account splits at $100 per split if done after settlement.. with this I may be able to slice up the loan into investment specific portions as build equity with not too much additional expense or hassle.

Also ratebusters relatively prompt and straightforward in answering my questions, and their web site is one of the few that actually bothers to go into a bit of detail on all the ifs and buts and elses of their products, with actual descriptions and examples of How It Works.

The disadvantage is their fee structure appears set to penalise people who leave them early, but then all things considered I see no reason to leave them early if all goes according to plan.

May 31, 2007

Still a bit confused precise operational aspects of these home loans work…

Filed under: loans — arandomperson @ 9:48 am

Well I’ll continue to shoot off emails to the loan providers and see if any of them reply.

excerpt from aus.invest thread:

On Sun, 27 May 2007 13:07:35 +0930, Fredd wrote:

>>I am considering a “line of credit” type home loan to buy a house so I
>> can continue with my regular investing in shares, using the equity
>> developed in the home loan further down the track.
>>
>> Accountant thinks this is fine (tax wise) as long as I get seperate
>> accounts on the loan to draw a line between the tax deductable and non
>> tax deductable parts of the interest paid.
>
> An ideal method of funding investment in that residential real estate
> secured loans are invariably the cheapest form of finance. Two caveats
> however:
> 1. Any borrowing can greatly magnify your losses so you need the
> knowlege, confidence, and financial ability to be able to hang on even
> if your investment tanks in the short term or the income from it dries
> up.
>
>
I already have a margin loan and I am comfortable with the increased risk
aspect.

> 2. Your accountants advice that you get ” get seperate accounts on the
> loan to draw a line between the tax deductable and non tax deductable
> parts of the interest paid” is absolutely essential. If you contaminate
> the loans you will lose the tax deduction. By contaminate I mean mix
> business and private sections, because then you will be unable to
> unambiguously satisfy the tax dept as to which dollar of loan interest
> or loan repayment related to private or business. Tax law requires that
> you be able to unambiguously attribute interest expenditure to a
> specific asset, not just on an apportioned balance of probabilities.

This bit, and the actual mechanics of how these loans work are what I am
curious about: I was thinking that how it works is that these line of
credit loans with seperate accounts mean I can draw money out (to use for
investments, or whatever) against the equity in the home, as I build up
the equity in the home. Then receive seperate interest (and transaction)
statements for the two seperate uses.

I just spoke to someone at Wizard Home Loans – a bit of confusion while I
tried to explain myself – still getting to grips with the terminology,
plus there is a bit of ambiguity with splitting/seperate accounts also
meaning using mixes of different loan products. They stated it doesn’t
work like that and I would be best off with a more conventional home loan
and a fixed 20K line of credit, and any “split account” is at an amount
fixed at the start of the loan and difficult to change afterwards.
Is there any loan that does match what I explained above? Or have I over
estimated the flexibility of current loan products on offer?

May 29, 2007

Line of Credit home loans

Filed under: loans — arandomperson @ 12:14 am

Well we have decided to get a house, or unit. As I still want to continue my messing with investments, a Line of Credit type home loan looks the go. I like the product from Wizard Wealth Power (Line of Credit) loan but the interest rate seems a tad high compared to what’s out there. We’ll see if they negotiate down.. otherwise it’s off to LoanAustralia..

Also that meet the parameters of having seperate acounts for keeping personal and investment use of the loan differentiated is the LoanAustralia Line of Credit. The difference in Comparison Rates is 7.77% – 7.16% = 0.61% between LoanAustralia and Wizard.

Also interesting to compare these two web pages:
http://www.loanaustralia.com.au/interest_rates.asp
http://www.aaamortgagefinance.com/interest_rates.asp

Hosted on the same class C network, owned by the same parent company, just differently themed and with a difference in the interest rates. Guess one is a site for signing people up at a higher interest rate if people don’t look around too hard.

January 16, 2007

StGeorge Margin lending integrated with ETRADE account – works well, but a few gotchas.

Filed under: loans — arandomperson @ 1:08 am

After just investing in managed funds via an Etrade Australia account for a while I thought I’d investigate margin loans.. after checking out
Etrades Comparison of available linked margin loan products I went with the St George option.
Got the account credentials and logged in, all straight forward.. I’ve got an Etrade account that I can buy managed funds with, and a St George margin loan that includes a lot of the managed funds that etrade provides in the approved securities list… all I have to do is transfer the managed funds from my existing account to the new loan account and away I got… not so easy. In fact, impossible. Although I was cheerfully talked through the process by both Etrade and StGeorge staff only to find it.. doesn’t work at all. The way the etrade managed funds system works means it won’t work at all with any of their linked margin loan products.. a bit dissapointing after all the paperwork and effort of setting it up. The intergration only works for buying shares. Bit of a let down but ultimately a learning experience, and has led me to explore other avenues that are similar (but possibly better?) than managed funds but can be bought with the margin loan shared account, such as Listed Investment Companies (see earlier post comparing Streettracks LIC vs Vanguard).
Of course I could go for the funds by just signing up for them directly but I am lazy and want everything managed online with a minimum of messing around with bits of paper, which is what attracted me to etrade in the first place.

The other minor thing is I need to enable the “sweep facility” for deposited cash to actually buy part of the securities being purchased.. none of the documentation or online information makes mention of this (and neither does the online application form linked by etrade), or if it does it is couched in different terminology. Once I sorted all this out however it all works fine, just a few tricks for total newbies to be aware of, though maybe either etrade or stgeorge should publish more info on the actual nuts and bolts of how these two online accounts work together (I suspect it is a new or not frequently used facility as most of the otherwise excellent support staff didnt know how they work either).

January 15, 2007

easystreet easyloan goes sour due to botched paperwork

Filed under: loans — arandomperson @ 10:49 pm

This link about EasyStreet Financial Services has some info on how what should be a readily straightforward loan goes off into the grass once the lender’s repeated mistakes, and apathy about assisting when it is apparent something is amiss.

The EasyStreet EasySavings is an OK product, but then so is the online savings account at BankWest’s www.abetterdeal.com.au but with a higher interest rate.

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