Hi. I live in maroubra, nsw, australia.
I should have invested a long time ago in property but ended up putting my $150k deposit (in year 12/2003) on some land in Avalon with my father.
I am looking for some help/advice on my situation at present in Sydney, NSW, Australia.
I owe $85k on the vacant land in Avalon. Value approx $600k. I will assist in the building costs to build a house with my father on the vacant land which will probably built in our spare time. The loan is in my fathers company name (which I am a director of).
My wife owns a unit in Maroubra worth $400k which we live in at present. Little money or $0.5k owing on unit. We could receive $300/week if rented out. Its close to UNSW on Bunnerong Road.
We would like to buy a house around Randwick/Maroubra area. Values are around $700-1000k. Either as a investment property to live in the future or to renovate/rebuild. But I don’t think we can afford it as we would both like to keep our properties.
Deposit $70k.
What do you recommend we do as we would both like to keep our properties ?
My wife does not work as we just had a baby. I earn $90k
I personally would like to invest in some property but that will delay our need to buy a home to live in within 6-12 months ???
Regards Michael
Since youhave a lot of equity you could get a loan to purchase another property fairly easily. But if you think you cannot afford the repayments, it may not be wise. Your home loan is low so you will be paying more tax on the rental income you would receive if you rented this out, and at the same time the interest on the new home would not be deductible as you would be living in it.
A way around this is to sell the unit you are living in now, maybe to your own trust, and use the proceeds to for a large deposit on your new home. The advantage of doing this is it will turn the whole mortgage on the old place 100% deductible and reduce your non deductible loan saving you tax and interest. But there would be stamp duty involved, so you would need to do some calculations to see how long it would take you to recoup your expenses.
Terryw
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You want to buy a $700k – $1000k house on $90k per year?
interest on $700,000k is going to be $50,000 per year. The $300 per week rent will be taxed so you probably won’t end up with more than $10,000 or less from that house per year. So you still need $40,000 just to cover the interest.
I think the bank would loan you the money just because of your equity but it is crazily stupid. Do you really need a $800k house? If you are going to live in it you really need to be paying twice the interest rate per year, that is 16% per year, which is completely unaffordable on your income.
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