Okay so i want to get an IP within the next 12months, what would be the best financial strategy. I have nothing saved thus far, my partner has $6000-$10000 by the end of the year saved up. My partner gets 30k pa and i get around 40k pa. So would it be better to use savings towards deposit to help bring the LVR from like 100% to something like 95-80%, another option i thought was if me and my partner use FHOG and plus 100 % plus loan (hopefully, interest-only loan) after 6 months (might do cosmetic reno) move out and use it as IP. Is 100% loans suitable for investment purpose, what would produce the best strategy, gettings a no deposit loan (100% plus) or should you always put in abit of a deposit to lower LVR and to rid ourselves of LMI , should i even be using the 100% loans when i'm purchasing an investment property- please add any pros and cons. Thanks guys, i'm realli lost here.
There are 100% IO loans available for owner occupied. St G also has a 100% loan with no LMI – but a higher rate.
If you are going to move in, and then out after 6months, it may be best to use as little of your own money as possible. This will keep your deductions high and free up money for personal use later on. Any spare cash could be put in an offset account linked to the loan, but not put into the loan (will cause tax problems).
But the more you borrow (the higher the LVR) the higher the cost of LMI will be. So you may need to consider your plans and the effects of increasing the deposit vs no deposit. eg. Putting in a 20% deposit may save you 3% in LMI – not a bad return.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi. Each to their own of course……but I would be inclined to save up a bit more as you can, for a deposit, and try and buy your IP with at least 5% deposit (most lenders will only to 95% lend on an IP without conditions or some other type if security) and personally try and use a 10% deposit if you are able. You simply flush so much money on lenders mortgage insurance when borrowing with much less deposit than that, and while many will say 'but it's tax deductable' (over a few years) I think it is better if you can to put it into your property rather than a mortgage insurance company. I guess a lot will depend on the value of the property you are looking at. All the best with what you decide.
hey thanks for the info guys . can anyone tell me of a good broker or an anvenue where i can speak more of possible financial strategies that will suit my individual needs. If i was to buy an Ip in another state apart from sydney would i have to get a bank/lender from the state where i decide to buy my IP or doesnt it matter
I think a good broker based in Sydney has already answered your initial post.
Terry W is excellent and well worth an email.
Richard Taylor | Australia's leading private lender
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