Aussies 'should be wary of home loan scams'

Thursday 21 January 2010

Article by Mozo

Home loan buyers should be aware of "sham arrangements" that promise to help customers repay their mortgages sooner and claim tax deductions to which they are not entitled, an expert has said.

Terry Hayes, a senior tax writer at the advisory firm Thomson Reuters, said that the Tax Office is currently warning Aussies against schemes where the promoter offers a plan for investments in foreign companies, the funding for which is partly provided by re-financing on the customer’s existing home loan equity.

In addition, Mr Hayes said that customers were often not aware of the arrangements involved in deals that require customers to refinance their existing home loan through a third party financial institution.

He said: "Tax issues of concern … include the possibility that certain loans may be shams, whether deductions for interest are allowable under the tax law and the possible application of the anti-avoidance rules."

Mr Hayes’ warnings may prompt mortgage holders to compare home loans in search of the safe, regulated options.

This week, Lisa Montgomery, head of consumer advocacy at Resi Mortgage Corporation, told News Limited that mortgage holders worried about defaulting on their repayments should consider purchasing home loan insurance.

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