Like Tree93Likes

2016 Tax Loans

Closed Thread
Page 4 of 10 FirstFirst 1 2 3 4 5 6 7 ... LastLast
  1. #31

    Join Date
    Feb 2009
    Posts
    8,279
    Original Post Deleted
    Well yes my intention was to borrow like you simply to pay off a mortgage in Australia at 4.34%. So in this case a very simply risk free opportunity borrowing cheap to pay off higher debt.

    But in the end after a bit of research, what I have done is a bit riskier and I have leveraged to take full advantage of the opportunity. For example, in the case of $2m, you could invest it in a unit trust earning monthly dividends anywhere from 5-10%, then the bank will give you an overdraft secured by the UT for $1.6m (80%) at a rate of 1.75%.

    So bottom line you could now borrow up to $3.6m ($2m at 1.87% and then a further $1.6m at 1.75%). I do acknowledge the risk in the unit trusts, but I've still achieved my original safe intention at the same time by sending the money from the OD to pay of the overseas debt. So in my particular case I decided to take a bit of risk here and there but still think overall balanced.

    Anyway, many things we can do with the money. The point is almost free unsecured money lying around at the moment

  2. #32

    Join Date
    Feb 2009
    Posts
    8,279
    Quote Originally Posted by pin:
    Had a glance at the Citi offer. I think you get HKD2.5k cash if sign up before 28 Feb, so that brings down the APR a bit, probably below 2%. The Citi website is quoting 1.59% APR for the first year inclusive of the cash coupon.
    It does depend heavily on the amount you want to borrow and the repayment terms. For amounts over $1m, and terms over 12 months, Citbank had the best deals that I could find. TB does appear to have gotten something even better from HSBC now. They were not one that I looked into. Standard Chartered offered me very poor rates and did not try to match Citibank.

    Yes Citibank offer $2500 cash back now and they are legally required to exclude this from the APR. It is supermarket coupons I will get in May apparently. So I actually got APR 2.08% without the cash back but then they calculated for me and told me verbally 2.03% with it.

    Citibank offer as low as 1.59% but then you have to borrow over $1m for shorter terms such as 12 months. The repayments are quite steep. I wanted something with a longer term. I ended up borrowing more but for a longer term with a more comfortable repayment schedule for me. So I got around 2%.

    Actually moneyhero have a page comparing all the different banks and you can enter the loan amount and repayment terms to see which is best. Just make sure to look at the APR and nothing else because many banks have hidden handling fees and other things which messes up the comparison. APR is king.

    https://www.moneyhero.com.hk/en/pers...Method=autopay
    pin likes this.

  3. #33

    Join Date
    Feb 2009
    Posts
    8,279
    Original Post Deleted
    Unit trusts are to me something new. I wont debate you on their performance and you may well be right. But I will say that I negotiated the subscription fee down from 2.5% to 1% and if the one I invested in (Allianz income and growth HKD) issues the same monthly dividend it has been doing every month since 2013 I will get this back in less than two months and then if I find it not performing well or basically giving my capital back in dividends I can redeem it instantly using SCB online banking platform with no fees for selling. So I will live and learn something new. Might perform well, might not. But this particular form of investment is what allows you to leverage and give you more bang for you buck (or can fall to the ground harder).

    I also got cash back and asia miles from the unit trust, standard startered have promotion on this now. They give $200 cash back for every 100k of trust (so $2000 for my $1m investment), another $200 for every 100k transfer in, (unbelievable that the loan I got from citibank and then transferred into my SCB account gave me another $2000 coupon since SCB class this as 'new funds'). Then Standard chartered give 35 Asiamiles per month for every 100k of trust, so im getting 350 Asia miles per month just for holding onto the trust.

  4. #34

    Join Date
    Feb 2011
    Location
    Hong Kong
    Posts
    6,317

    All potentially negotiable. I've heard of them offering 20-25x for PR. Much higher than their advertised multiple. Some banks use your credit card limit to get it higher. I walked by a bank in Central and the sign was at 1.89%. So it's cheap money.


  5. #35

    hi, im in a similar situation to bdw - got an aus mortgage around 4%

    can i ask do tax loans have a fixed % rate (e.g. I saw 2% APR quoted above)?

    i have a paid off house here in HK and considering whether to refinance my current house (got offered H+1.33% - 1M HIBOR / Small P-3% and 1M HIBOR recently is now back down to pre Dec' 16 rate hike levels at around 0.51% today)

    if the tax loans are fixed rates it might be worth the 0.25% premium or so to pay over remortgaging my HK house given 2 rate hikes are pretty much priced in for HIBOR by year end

    (one thing not mentioned here is credit ratings taking a hit - pretty sure tax loans reduce your score more than a mortgage given it's unsecured)


  6. #36

    Thanks DeletedUser

    Fixed @ 2% sounds really good if the tenor can be 24months+, will pop by some branches soon.


  7. #37

    Join Date
    Feb 2009
    Posts
    8,279
    Quote Originally Posted by aussie_oi_oi_oi:
    Thanks DeletedUser

    Fixed @ 2% sounds really good if the tenor can be 24months+, will pop by some branches soon.
    Yes you can get fixed APR around 1.6% for 12 month terms, 1.8% for 24 month, 2% for 36-48 months. These are all amounts of $1m+. Below $1m will not give you as attractive a rate. This is what citibank were quoting me.

    I think you cant lose borrowing as much as you can here and sending it to Australia to pay off as much as you can on your 4% loan over there. With the AUD fairly weak at the moment compared to a few years ago is also an extra bonus.

    Whether you get a mortgage or a tax loan is an interesting question. Both would give you an interest rate of around 2%. But I would say go for the tax loan if you can because then the rate of 2% is locked in for the full term of the loan. If you get a mortage at H + 1.33 now it sounds good. But that H is not fixed and been edging upwards recently. I'm a bit nervous it might suddenly explode upwards soon.

  8. #38

    Join Date
    Dec 2002
    Location
    薄扶林
    Posts
    47,963

    I agree with jrkob and would prefer a mortgage over a tax loan due to the flexibility. You can pay off the mortgage with very little penalty if you have the liquidity. However a tax loan might put pressure on you, esp with the employment related uncertainties in many sectors.

    Liquidity and flexibility of a longer term loan are probably more important to me.


  9. #39

    Join Date
    Dec 2002
    Location
    薄扶林
    Posts
    47,963

    Was also not thinking of any bank / legal fees related to a remortgage of an HK property, if the mortgage is from a new bank.

    We remortgaged about 5-6 years ago to move from a cheaper mortgage, forgot what the costs were, but I do recall that our lawyer was involved, so it was obviously not "free" but I assume it was in the $10K range. Too a lot longer than walking into a bank and getting a tax loan would take.


  10. #40

    Join Date
    Feb 2009
    Posts
    8,279

    The tax loan I just took is for 4 years which is getting into mortgage territory. I basically borrowed for as long as I could, allowing me to get a fixed low rate for 4 years regardless of whether rates go up or not.


Closed Thread
Page 4 of 10 FirstFirst 1 2 3 4 5 6 7 ... LastLast