BG> It works (one of the blokes I worked with was organising these deals
BG> at the time), but the legality of this always worried me immensely
BG> (and naturally, the buyer is also paying higher up-front costs (stamp
BG> duty etc.) based on the overvaluation.

RS> Yeah, there are always ways around the system. I did it myself
RS> when I was building my house, 0% deposit actually. Mainly coz I was
RS> interested in how feasible it was and I was earning a better rate on
RS> the money I would have otherwise used as a deposit than I had to pay
RS> in interest. Worked very well actually.

BG> Were you still in front when the tax payable on your investment's
BG> interest was taken into consideration though?

Yeah, those were the days before capital gains tax. Even today, its not
that hard to get a 20% return on some of the higher risk investment areas,
so even the after tax return can well be better.

Even say long bonds at 10%ish, in some cases that can be tax free in a
family situation if the total interest is below the tax free threshold
if say the wife doesnt work. So worth retaining instead of using it in
the deposit.

--- PQWK202