what are my options ?
recently I refinanced 2 properties I have in W.a and bought a 3rd I.p in NSW..i purchased them a bit over 3 years ago for a total of $130k for both using 100% equity loan over a Ppor that was valued @ $340k @ the time the Ppor is owned out right and we have no other debts apart from living expenses.
the loan is an Int-only loan for $130k… the rent received from both covers the monthly interest payments and I have funds left over that I have been keeping in an offset account.
I had the properties revalued by another bank at 325K (160 & 165k) and was able to borrow with this new bank 100K over each of the 2 I.P's and 50K on the new i.p on 3 separate interest only loans, my intent originally was to pay out the first loan of 130 K and pay 100% of the NSW I.P of 100K with 20k left for renovations and settlement costs, total loan 250K
and no more mortgage over the Ppor.
i had given notice to the 1st bank of this intention and the second (new bank) I thought(hahahaha) would send the 130K to pay this loan out.. however they did not pay out the 130K insted they cleared and took over the morgages of the 2 W.A i.P's and the first bank still holds my Ppor as mortgage over the original 130K loan.
I am now left with 155K drawn down into the offset account connected to the 2nd loan package and have used only 95K of the total 250K borrowed.
i just recently sold another i.p and now have a little over 50K in the first banks offset account against the 130K loan there.
so i now have 4 loans with 2 banks and a bit over 205K in cash to decide what to do with.
Its been a bit over month now and both banks have not contacted me about the situation and it seems both are going to leave things as the are . each holds titles over properties worth 425 against 250 K loan and 340K against 130K loan… so I think they are more then satisfied with the situation..
I have thought about continuing with my original plan to pay out the 130K loan with the first bank, which would leave me with a bit over 70 k to either leave in the new loan offset account or re invest in one more property. and less interest payments each month.
OR
i have come across 2 new I.p's that I can buy for 85.5K with a tenant @ 120 P.w and 110K with a tenant @ 140 P.w Total 195.5K + settlement costs.
if i combine this with my 2 W.A I.P's and the Nsw i.P which is now tenanted @ 150 P.W I will have 37.4K per year gross income and I only need 34K to cover all the interest payments with both Banks. i will also have 2 unencumbered titles with a combined value of 200k, which I could use to release the mortgage over my Ppor if need be later. or use to purchase more positive cash flow I.P's
all properties are held in a company name under a family trust as the trustee.
I have been able to so far keep my losses on paper so that I have tax credits for the last 3 tax returns.
My wife and i do not work although I receive a tax free annuity for life that gives us more then enough to cover our life style and an exsess to save travel and provide for our children's needs.. so I don't need the income from the properties other then to pay the loans..
i wonder if any one could give me some feed back on what would be some of my options if i go ahead with either option 1 or option 2 , and if there are any advantages or disadvantages to either one..thanks in advance
nucopiaI would have thought some one would venture an opinion by now ???
Maybe your explanation need simplifying and clarifying and your question rephrasing?
Perhaps like this:
"I have 3 investment properties and one PPOR. The PPOR is currently mortgaged for $130k and I would prefer to see this gone. I have sufficient funds to repay the loan, but am considering using this money to purchase another two properties instead. Are there any obvious advantages or disadvantages to either route?"
My answer will be pretty simple and direct. Something like "the first option leaves you with fewer assets but less debt. This would be the conservative path. The second option leaves you with more assets and more debt. This is a more aggressive path. Ultimately the choice is yours."
Cheers, F. [cowboy2]
thanks F
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