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Thread: Advice Needed Pls

  1. #1
    Join Date
    Jul 2009
    Posts
    6

    Default Advice Needed Pls

    Banker recommended using
    1. Home Equity Loans
    2. Use that money for Bonds

    Apparently, this will mean the property finances itself.
    True?
    Catch?
    Wisdom?
    Tks

  2. #2
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,531

    Default

    Quote Originally Posted by aureus
    Banker recommended using
    1. Home Equity Loans
    2. Use that money for Bonds

    Apparently, this will mean the property finances itself.
    True?
    Catch?
    Wisdom?
    Tks
    False, If interest from 1 is > than 2.

  3. #3
    Join Date
    May 2010
    Posts
    1,406

    Default

    Quote Originally Posted by aureus
    Banker recommended using
    1. Home Equity Loans
    2. Use that money for Bonds

    Apparently, this will mean the property finances itself.
    True?
    Catch?
    Wisdom?
    Tks

    Watch out... That how Americans housing problem begin...
    Daft, Dafter, Dafterest!!!!

  4. #4
    Join Date
    Oct 2010
    Posts
    1,997

    Default

    May I know which bank and which bond did they recommend? Thanks

    Quote Originally Posted by aureus
    Banker recommended using
    1. Home Equity Loans
    2. Use that money for Bonds

    Apparently, this will mean the property finances itself.
    True?
    Catch?
    Wisdom?
    Tks

  5. #5
    Join Date
    Aug 2009
    Posts
    3,943

    Default

    There are many considerations in this equation. I list a few.

    1. There is sale charge involved if u buy bond funds. The charge can be as high as 3% upon purchase. No sale charge upon sales. The bond fund manager charges around 1.5%pa.
    2. If u buy straight bond, the default risk is higher.
    3. Financing cost on leverage ranging from 1.8% (S$ and US$) to as high as 5% for A$. Equity term loan on properties should be around 1.3% thereabout.
    4. custodian fee is around 0.2% there about.
    5. U can leverage 3-5 times.
    6. some bonds are paying in ave of 5% (US$) or 8% A$
    7. beware of currency risk exposure unless ur in S$ hedged.
    8. There are many consideration to pick a fund, like callable, cumulative, tenure, collateral, credit grading, currency, issuers, dividend history etc etc.

    There are many good corporate bonds in the market and u can leverage on.

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