CBA LOC , asked to nominate reason as personal or investing ?!

Do you think the Ato will be so generous....you better have some solid records

 

you got it....to make it worse everyone at the CBA is a zombie just believe what the computer and processes say. Ine of the reasons CBA is cosistently getting bad publicity.

The other is a lot of Execs at CBA were ex management consultants not retail bankers which affects how they operate and treat customers.

 

yep if 5hey deem you as a risk good luck

 

Strange statement.

In any case you would need solid records for claiming any expense.

 

Terry no pont of fear incertainty doubt. All i am saying is this is basic hygiene. One of the reasons i recommend all investors understand the ramifications of loans. A lot of this content is readily available in bokd and online. Better still lots of investors on this site who have the scars and the experience to provide some level of guidance. Aftet that that individual needs to do their own DD.

 

Sash, you comments don't make sense - from a grammatical or legal point of view.

There is no need to tell a bank a loan is an investment loan just to be able to claim the interest as this has no bearing on whether the interest is deductible or not.

 

I will use that during the next AGM during the question time should get me thrown out real quick..

 

Terry........I typed this on my mobile phone.....

I get you don't need to tell the bank that is not tax deductible....but they are asking?

Seek to understand first why they are asking. Banks don't ask these questions for nothing..it has to do with their risk profile. Reading between the lines...it would seem that they are concerned about large LOCs on investment loans...so the question is why?

My guess is that they want to shore their position as they suspect some level of delinquencies. I have posted in many instances of why one should use a LOC vs a Offset. Most bank contracts state that an LOC could be closed with very little notice...harder for Offset as it is transaction account offsetting something.

Now back to the issue ....the people who would want to know if interest is deductible or not is the ATO not the bank.

Hopefully this clarifies things. I know enough about this ....to be dangerous these days...

Unfortunately...I have seen too many instances where people have seen experts in structuring and have implemented things which are not suitable. As a matter of fact quite a few investors on here have done that ......and in some instances it has caused a lot of grief. So proper due diligence is paramount as to what is suitable for someone...one size does not fit all. Advisors can advise but unfortunately the decision ultimately rests with the person who is owner...thus why I recommend people get really educated.

 

I guess you just can't admit you were wrong?

 

the risk with an incorrect disclosure to the bank is , if they find out you've been less than truthful , then they may decide to review your loans in that light .

We have LOC's with westpac and probably have enough spare equity in that to transfer the loans from CBA to Westpac .

Might even look at transferring some into I/O loans to get a slightly lower rate .

Cliff

 

If you were a bank, how would you Increase profit margins? Upping the interest rates for everyone (including the Aussie battler struggling to pay off their one home), or increase their interest rates on Investor products (who are generally perceived to be making good money, even if it's not the case). For the first party, the banks are seen as screwing them over, for the second, that's just the cost for doing business.

 

Yep...if something goes wrong...they have got you....essentially at best case lied and worst case committed fraud....

 

Yep...that is exacly what they are doing...you just need to be able to plan the game.

I fixed a lot of my loans at 3.84% about a 1 month ago....

 

I do not know really so take this with a grain of salt.

From where I stand, they are going through all products and applying not only rate increases, but probably compliance with lending changes, a perfect way to also lift income.

 

But an LOC is liquid. Today is business, tomorrow is personal.....what if you have mixed it, do they give you a split LOC rate ?

 

Have to check our limits , but we may well be able to transfer funds so it becomes personal , but if you start retransfering funds around they may start asking questions , and they'd probably include a statement that you need to notify them if there is a change in purpose .

We can change them to standard loans at a lower rate , but I like the flexibility of having the LOC available .

Cliff