Has anyone looked at http://www.cashflowmortgage.com.au from Investors Direct, the site and the product?
I saw Bill Zheng's presentation in Brisbane the other weekend. The product does look like it could help with addressing cash flow shortage, and its pretty, um, 'creative', the way they let you refinance and start all over again at the end of 2 years. All Bill's stuff seems to assume a 10-11% Capital Growth (which would worry me a little on a short term basis) and I gather you are continually capitalising the 'discounted' component. I'd wanna be real sure whatever I bought was going to achieve great CG if my already substantial debt is going to keep growing exponentially. At the end of the day it seems to me like its just a form of creative financing that offers some benefits in cashflow at the expense (in the long run) of paying a higher interest rate. Got to give it to them though, its a creative idea, and apparently patent pending, even though some on the Somersoft forum seem to think its all been done before. I already have a creative financing package - he's called Rolf Latham ;-)
I've heard there are other ways of achieving the same result through traditional type Loans i.e Low Payments upfront and capitalising the debt?
I suppose when you look at what they present - all it really is, is ... capitalising a portion of the debt, giving you a lower repayment in the first couple of years. Then the bit where you rollover after Year 2 is really only like refinancing the loan. I guess you can do both those things with other lenders. The creative bit I mean is how its been packaged and presented 'cos I guess the average person wouldn't take on this type of administrative hassle to achieve the same end - this might be a low hassle way for them to get started. And then to call the idea patent pending (I guess people have managed to patent even more common ideas!) is pretty 'bold' Unless I hit a cashflow armageddon I don't think this approach would suit me because continually capitalising debt while assuming a yearly 10% growth might be very uncomfortable in 10 years time if there were some slow years ahead ?
My gut feel, without having really looked at the numbers, is this. Surely if you can get a 90-97% lend (with LMI obviously) then surely that's better than getting only an 80% lend with lower repayments? Couldn't you use the 80% and keep the 10-15%+ as a buffer? Isn't the whole point of property the massive gearing you can get? Just some random thoughts... N.
Yeah, but this one goes higher than market rate in the 4th and 5th years, where I guess a lo-doc would not ? Suppose it depends how much you borrow ...
mortgage insurance (otherwise known as lender's mortgage insurance) check it out in the Glossary http://www.invested.com.au/Glossary/LendersMortgageInsurance
Nope its not lo-doc ... the borrower is still qualified as far as I understood it... http://www.cashflowmortgage.com.au/mortgage.htm
