Hello All,
I’m getting a little fed up with being mortgaged to the hilt. We are constantly struggling to maintain our PPOR & Investment Mortgage.
Now the boom has increased our equity we could sell off our PPOR for 650k, repay the 350k mortgage & pay of our Investment Property mortgage 220k (our old PPOR which has only been rented for 2 years out of the 8 we have had it) & live with no mortgage rather than owing 550k to Mr Bank.
My gut says to hang in but I also feel with no mortgages we could really start making our money work better and have a better gearing option as most of our oewings are on our PPOR not our investment property.
Any help or words of wisdom appreciated.
Cheers
I’d say it depends on the value of your old PPOR (currently the IP).
Let’s assume it’s $600k with 220k owing. It would be better to sell it and pay off all borrowings. Then you could borrow 107% and buy another IP or 2. Even though your borrowing might end up being the same total amount, the great thing would be that all the interest would be tax deductable.
Just to explain a bit more. There are 2 probable causes your cash flow is suffering, and it’s not that you owe $550k.
1) You have a large debt on your PPOR, and this is non tax deductable
2) Your debt on your PPOR is P&IThese two problems can both be solved if you have decent equity in your IP by selling your IP and paying down your debt (starting with clearing the IP debt). Once that is done you can then buy another IP and all these borrowings would be tax deductable.
If you do not have equity in your IP then some hard decisions need to be made. You could tweek your existing PPOR loan and make it I/O, that would ease the paid a bit. If that isn’t enough though you need to consider selling your IP and buying a cheaper IP, but the change over costs are high.
It makes no sense though in either situation to sell your PPOR.
I agree, having untaxdeductable debt on your PPOR is a killer. It was the hardest thing I ever did when I bought my own home. ASAP I sold one of the IP’s during the boom and payed off my home’s debt. Gee, it really made a difference to my cashflow, and I was able then to go forth and buy more IP’s. The feeling of actually owning your own home, is good for your own wellbeing as all that stress of losing the family home is gone.
If you want to get out of a hole, first stop digging.
Originally posted by Brenda Irwin:I agree, having untaxdeductable debt on your PPOR is a killer. It was the hardest thing I ever did when I bought my own home. ASAP I sold one of the IP’s during the boom and payed off my home’s debt. Gee, it really made a difference to my cashflow, and I was able then to go forth and buy more IP’s. The feeling of actually owning your own home, is good for your own wellbeing as all that stress of losing the family home is gone.
If you want to get out of a hole, first stop digging.
sorry for the newbie question, but what is a PPOR?
sorry for the newbie question, but what is a PPOR?PPOR – Principle Place Of Residence
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