A friend put me onto this site yesterday and I have learnt so much from you all so thanks.
I bought my first house last year and investigating first IP this yr. I am currently paying over twice my fortnightly mortgage pmt. What I don’t have is 20% deposit to put into an IP, so do I reduce current pmts and save the 20% or borrow 100% and tax deduct the lot. Main focus is part of long term growth for retirement and I would love to reduce my tax now. Any help appreciated
Cheers
Hi Scott
Firstly welcome to the site and i hope you enjoy your time.
First up i am concerned as to why you are making P & I repayments off a investment loan – i dont think youhave been well advised there.
Secondly there is a 100% loan and a 100% loan and they differ.
If you mean borrowing the full amount with costs and using your other property as security bu X collaterilising the loan then i wouldnt recommend this. if however with correct structuring you mean borrowing the full amount and keep the properties separate then that is fine.
Many lenders offer 100% + loans on IP without other security so as long as you have good serviceability that maybe an option. Obviously the interest rate is slightly higher.
Options galore but structure needs to be correct first.
A good MB should be able to advise you.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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Hi Scott. Welcome to the forum. And may I congratulate you on making those extra payments on your home. Getting the principal amount down by paying extra is great – you will already have churned a few ‘years’ off your loan term. However with your first investment property, in order to save up some deposit, it may be an idea to step these payments back in order to do so, and then increase them again after if and when you can. You would generally pay only the interest on your investment property loan, and put any extra into your home. If you are not in a blazing hurry, saving up a minimum of 5% deposit plus costs would be ideal, and an extra percent or two again will save you on Lenders Mortgage Insurance – rather than borrowing the lot.
Naturally your interest payments will be tax deductable on an investment property, as it will be income producing. (The actual ‘principal’ is not, which is why you are better off putting extra funds into non tax deductable laons, such as you home). Good on you for getting serious, and I wish you all the best. You will find plenty of help and general info on this forum! [biggrin] [strum]
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