What should be entered as a Secured loan
The following should be added as a Secured Loan:
Investment Property loans
Margin loans on shares (SDS only)
Secured Loans can be for directly owned assets or assets in an SMSF or Trust.
A secured loan can use the equity in a family home or property to fund the purchase of another asset.
Do not enter under secured loans:
Car loans - Even if the car loan is secured by the car, this should be entered as an Unsecured loan
How to add a Secured loan
How to add existing loans
Existing loans should be added at the Current situation step with the asset that they financing:
If the asset is directly owned, then add the loan at the Current situation > Assets & Loans step.
If the asset is owned by an SMSF or Trust, then:
At the Super & Trusts step, add the SMSF or Trust
Add the asset
Add the secured loan
How to add new loans
New loans should be added at the Cash flows & goals step. First add the asset that the loan is financing, then click the +Add new loan financing (asset) button which is listed under any asset you can finance with a loan. Note that if you are adding a new loan to a new asset, you need to add the asset first, if you are adding a new loan to an existing asset, the asset will already be listed.
If the asset is directly owned, you can add the loan at the Review assets & loans step
If the asset is owned by an SMSF, you can add the loan at the Review super funds step
If the asset is owned by a Trust, you can add the loan at the Review Trusts step
You should also note that only some loan types are included in the websolve:
Existing loans secured by existing homes and properties
New loans financing new homes and properties
Loans that aren't included in the websolve (e.g. loans financing shares, new loans financing existing assets) will either be marked with a rocket ship icon on the button or a message will appear when you add it.
Modelling options for Secured loan
These modelling options only apply to loans secured by directly owned assets (not ones owned by SMSFs or Trusts)
Defining how much is borrowed for a new investment property or family home
If a new loan is taken out, the amount that is borrowed will be calculated based on the following:
For example, if the Loan to Value Ratio is given as 80% and the Value of the property at the time of purchase is $500,000, then the maximum amount that can be borrowed is $400,000 (i.e. $500,000 x 80%). The amount borrowed will not exceed the LVR, but it could be less if the individuals can afford to make a larger deposit and it would maximise their wealth under the given assumptions.
Controlling loan repayments
On the Cashflows & Goals > Review Assets & Loans step, there are options for controlling loan repayments, so that the loan can be paid off earlier or later.
Paying off a loan early and keeping the same repayment every year
If you choose to pay off a loan by a particular year, Pathfinder will optimise repayments, so the repayments may vary from year to year. If you would like to spread the repayments evenly across a set number of years, then:
Set tax status of loan repayments
By default, the tax status of the loan is determined by what asset it is secured by:
You can override these defaults by editing the 'Percentage deductible' field on the Secured Loan.
Change the interest rate in future years
To model the interest rate as increasing or decreasing in future years:
Run a 'stress test' scenario with higher interest rates
If you would like to 'stress test' a scenario by checking what would happen if interest rates increased, you can:
In the results:
Additional help topics
Results for Secured Loan
Assets that can have secured loans:
Strategy Development Service (SDS) and Background adjustment options
If the case includes complex analysis that you are not able to do in Pathfinder yourself, Optimo Support may be able to do some background adjustments to help you get the results you need. Depending on the complexity, this may be included as part of the standard support or additional charges may apply. For more details, please see Modelling outside the scope of Pathfinders' standard modelling.
Some examples of things that are outside the scope of Pathfinder's modelling and how Optimo support can help, are listed below:
Information required by Optimo Support
Examples where additional charges may apply
Specify an exact amount to borrow
Pathfinder can sometimes borrow less than you expected, if the individuals have other available funds they can use for the purchase.
The amount of a loan obtained for investments, such as properties and shares/managed funds, is optimized based on the specified ‘LVR’ (max 100%) and ‘Maximum % of asset funded by loans’.
Borrow against an existing asset for a line of credit or as a home equity loan (unless it’s for financing another property, home or shares/managed fund in the case)
If you are borrowing against a property to fund another property, home or shares/managed fund, this is possible for you to do yourself. Please see How to enter a loan that is secured by one asset and financing another asset (e.g. home equity loan)
If you want to borrowing against an existing asset to fund renovations or other lifelystyle choice, then Pathfinder may not borrow enough ot too much.
Refinance a loan
You need to add:
Please email support and tell them:
If you add a new loan that is secured by and financing an existing asset, Pathfinder may not borrow any funds against it.
Borrowing for shares (margin loans)
You need to add and fill in as much as you can:
Please tell support:
Pathfinder may borrow more or less than what you require, and it may not be possible for you to control the borrowing amount in the interface.
It may be possible for you to model the strategy yourself, however if you require something like extra mortage repayments should be equal to the amount borrowed on a loan, and the amount borrowed should be invested in a managed fund, then this will require a background adjustment.
If the case has a lot of loans or assets to adjust, or there are complicated contraints.