First IP or not..

Hey everyone, first post on the forum :) Just after some advice and opinions on some good or not so good options in my current financial situation. At the moment I have a townhouse that i am living in and will be for the forseeable future. Currently there is about $360k owed on the HL and the main thing I want to do is pay it off as quickly as possible so that I do not have a HL as such but can start investing with more security behind me. I guess this brings in the big question which has always stopped me from investing till now (always wanted to get an IP or even shares) but haven't because: do you put everything in the HL and pay it off quickly which would be at least say 12 years+ away or do abit of both which to me seems like a better idea maybe? (another reason for this is that I am sorta locking myself into forced savings with an IP)...I guess I am hoping in the current property market I can buy while the market is relativly low and sell in the medium-long term 8-10 years for a decent profit to pay off my current HL sooner... Is this strategy realistic? other options? Just pay off the HL without any investments? Thanks :)

Hi Air

Firstly welcome to the forum and i hope you enjoy your time with us.

May i ask you why you wish to pay the home loan off as quickly as possible.
Certainly you want to structure your loan in such a manner that you reduce the non deductible interest but remember once you pay off the principal you loose flexibility and the option down the track to rent the property and claim the full interest as a tax deduction. 

By converting the loan to an Interest only loan you will reduce your monthly committments and free up more taxable income to enable you to invest. 

Remember depending on the suburb you look to buy in you can still obtain a 100% loan and even more subject to your current equity position.

Personally as long as your disposible income is sufficient I wouldnt be putting off increasing your property wealth merely because you have a current home loan.

Get your mortgage broker to undergo a serviceability check for you and suggest ways of restructuring your home loan to maximise your interest savings. 

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
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