|
HOW IT WORKS:
Cashflow Smart Investor (CSI) allows you to use a small part of your equity in your own home or investment property. Choose your own repayment structure - from as little as $50 per month. Reduce your monthly loan repayment for a period of up to 5 years. A full repayment is made during the reduced repayment term. However, only part of the payment comes from the borrower.
Depending on you, there are two accounts:
1. CSI Home loan account:
• Loan of up to 30 years
• Redraw facility
• For your convenience, phone and internet banking facilities
2. CSI Repayment Account:
This is the repayment account and cannot be accessed by you during the repayment loan term. Each month the pre-determined portion of the repayment relief is transferred from this facility into the Cashflow Smart Investor Home Loan. This reduces the minimum payment required by the borrower. No repayments are required on this account until the end of the repayment loan term.
• No fees
• Reduced payment options from $50 per month
• Maximum LVR 90%
• Flexible loan term
Ideal if:
• You are paying off higher interest consumer debt such as credit cards
• You want to smooth repayments if you are on fluctuating income
• You are funding investments
• You want to purchase a more expensive property
• You want to take a break (holidays, maternity leave, furthering your
education) while still maintaining your repayments and cashflow
Your benefits:
• CSI is safe and controlled
• CSI gives you the ability to improve your cash flow
|
Repayment relief for maternity leave
Mrs. Home Owner wants to leave work for two years so she can raise the family's new born child. To maintain the family's current lifestyle while Mrs. Home Owner isn't working, their current monthly mortgage repayment of $2036 per month needs to be reduced to $1000. After refi nancing their $262,000 mortgage to the CSI Loan, the current monthly shortfall of $1036 can now be paid from the CSI Repayment Account and not out of their own pocket.
| |
At Finance |
2yr Snapshot |
| Home Value |
$500,000 |
$551,250 |
| CFE Mortgage (+R/F costs of $2K) |
$264,000 |
$256,786 |
| CFE Repayment A/C |
$0 |
$22,864 |
| Total Loan Balance |
$264,000 |
$283,650 |
| Repayments Saved |
$0 |
$24,864 |
| Owners Equity |
$236,000 |
$267,600 |
The diagram above highlights the diff erence between the Home Owners current situation at the time of refi nancing and what their situation will look like at the end of the two year reduced repayment period.
While Mrs. Home Owner was on maternity leave for two years the couple enjoyed nearly $25,000 in repayment savings plus an improvement in their overall fi nancial position. While their debt grew marginally over the reduced repayment term, their net equity position grew by over $30,000 - based on a modest 5% annual capital growth rate.
Assumptions: The assumptions used are an example only. Seek independent fi nancial advice for your own situation. In this example $1000 per month paid into the home loan by the borrower for 24 months. $1036 per month capitalised into the CSI Repayment Account for 24 months. Interest rate used for the Cashflow Smart Investor is 7.99% variable pa for 24 months, property Capital Growth rate of 5% per annum for 24 months.
Ms Investor owns a rental property valued at $400,000 which is currently tenanted for $325 per week. The property has an outstanding mortgage balance of $320,000. With the associated costs of owning a rental property including maintenance, interest payments, management fees, rates and insurance, the property suffers a cash shortfall of approximately $200 per week.
Ms Investor doesn't want to sell the property but due to changed personal circumstances she can now only afford to cover half the weekly shortfall.
Ms Investor sets up a CSI investment loan for three years to cover the cash shortfall allowing her to keep the property as it continues to enjoy strong capital growth.
In this example Ms Investor saved $15,600 in payments on her investment property over the three year period. Her debt grew marginally but with a modest 5% annual growth rate her net equity position will grow from $75,000 to $120,489.
| |
At Refinance |
36 Months |
| Property Value |
$400,000 |
$463,050 |
| Loan Balance (+R/F costs of $5K) |
$264,000 |
$325,000 |
| CFE Repayment A/C |
$0 |
$17,561 |
| TOTAL LOAN BALANCE |
$325,000 |
$342,561 |
| Repayments Saved |
$0 |
$15,600 |
| INVESTORS EQUITY |
$75,000 |
$120,489 |
|
