Case studies

NOTE: For privacy protection, names have all been altered in these actual real life examples of how we have helped our clients.

Refinance of Credit Cards and Tax Debts

Adam and Stacey were referred to us by their accountant. Adam is a successful carpenter and has spent the last 3 years building his business, that offers carpentry solutions to building companies. His business is thriving now, but over the course of the early years, him and his wife have managed to accrue $97,000 in credit card bills, and has also neglected to put aside tax for his earnings and now owes $37,000 in unpaid tax debts.

Their combined earnings, with Stacey’s take home pay as an employee and Adam bringing home $6,000 per month after tax, sees them with over $10,000 per month in net income. However, the repayments on their home loan are $3,500 per month, credit cards $1,500 per month (interest only!) mean they have approximately $5,000 per month for total bills, including funding costs for their two children, one in private school.

They also owed $100,000 to a family friend who hasn’t asked for it to be repaid but also now needs these funds for his own children’s school fees. Adam’s credit file was not very rosy, as he had a previous business go into liquidation and some unpaid credit defaults.

We were able to refinance their total debts, $780,000, with a new lender and reduced their total repayments by $1,000 per month. Adam and Stacey are now able to go on holiday’s to the beach several times a year and do not feel the overhang of debt. Moreover, at our next review, I have discussed how we may be able to move to an even more competitive rate provided he has 12 months of good conduct on their new loan.


Reverse Mortgage

Frank and Mary are independent retirees that live in a home in Kew worth $1.8 million. Frank was a successful businessman and retired with a reasonable amount of money that has tied them through the first 15 years of their retirement.

Frank and Mary are now in their late 70’s and whilst they don’t travel as much as they used to, they are finding that their Account Based Pensions managed by their local adviser are running down faster than the earning rate because they do enjoy a comfortable income in retirement. They want to visit their relatives in the UK one more time and have access to funds in readiness for their Account Based Pensions dwindling.

Whilst in good health now, Mary’s mother did have to move into a nursing home in her early 80’s and so they are hoping to put in place arrangements in case they require funds in the future for this purpose (particularly as such transactions need to happen whilst Frank and Mary both have sound cognitive abilities). Their solicitor alerted them to this fact and suggested a meeting with Andrew to put in place a reverse mortgage.

Within 3 weeks, Frank and Mary had established a reverse mortgage facility for $450,000 which means in the future Frank and Mary feel safe and secure in the knowledge that should either of them have a need for these funds they will be available.


First Home Buyers with Mortgage Insurance Issues

Ben and Holly are first home buyers that have accumulated $40,000 in cash savings and are now looking to buy in the Northern suburbs of Melbourne for around $550,000. They had been told by friends that they shouldn’t even start looking until they have accumulated 10% of the purchase price, and even then should be ready to pay substantial premiums in mortgage insurance (they were quoted $18,000 by a previous encounter with the local bank).

At a Christmas party they mentioned this to Ben’s parents, who are clients of a referral partner. They had seen at the referral partner’s recent client briefing that it was possible for persons who had family members with equity in their home to enter the property market with little more than enough funds to pay for associated stamp duty and legal conveyancing costs – in their case, less than $20,000 provided they purchase for under $600,000. Ben’s parents are very happy for Ben and Holly, who have recently married and have been together for 7 years, and as a Christmas present decide they are happy to allow them to utilize the equity in their home in Clifton Hill to get into the property market.

They end up being the proud owners of a property in Preston for $590,000 and in total avoid paying Lenders Mortgage Insurance of $18,000 from a lender that would have done the deal without the assistance of their family. That was one Christmas present that Ben and Holly won’t forget, and it didn’t cost their parents anything.

With Ben’s new role as a qualified Civil Engineer on $150,000 per annum, and Holly’s income as a nurse on $60,000 per annum, after a few years they will also be able to repay the favor to Ben’s parent’s by paying off the second loan split that is secured against Ben’s parents home, freeing up equity for them should they later need it.


Self Managed Super Fund Loan

Chris and Marie are business owners that own and operate a successful retail business that turns over approximately $4.5 million per annum, but has significant overheads (advertising, sales shows, staff and rental storage) that reduce it’s profitability to $250,000 to $350,000 per annum fairly consistently.

They have approximately $650,000 in combined superannuation assets and are in their late 50’s. Their business accountant mentioned to them that they may be able to purchase a property to house staff and storage and do away with an offsite storage factory. Their total rent for the staff premises and the storage factory is $120,000 per annum. Purchasing the new property would effectively halve their total rental costs, to $60,000 per annum.

They discuss the strategy with their advisers and agree upon a course of action – establish a Self Managed Super Fund with some of their superannuation and fund the balance of the purchase via a limited recourse borrowing loan. Their solicitor established the appropriate structures and lease agreement, a buyers advocate engaged to do the bidding, and the property purchased for well under the clients expectation.

The loan repayments and contributions by the clients mean that the associated loan will be repaid in approximately 6 years at which stage they can discuss with their advisers moving the property into a tax free pension phase.

Meanwhile, they were able to retain a significant portion of their existing superannuation in managed funds for diversification purposes, managed in conjunction with their trusted financial planner.

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