hello,
my first post here after reading a little. I'm currently renting and am thinking of buying a property (living in melb) in the next 6 months to live in to get FHB grant then renting it out.my question is this, say you purchase a 300-350k property, would it be better to put down a 10% (ie 30k), 20% (60k) or even 40% (120k) deposit ?
ie. is the money best of residing in your home so you pay less interest ? because currently it's just earning interest in the bank.
thanks, AJ
Depending upon your personal situation & property investment aspirations (refer to your accountant/fin planner) but interest on your place of residence is not tax deductible – so it is usually in your interests to have at least 20% deposit to avoid mortgage insurance and to reduce interest payable.
You may also consider structuring your loan with an offset account to reduce the amount of interest by having your surplus funds and pay go into this account.
Adv of large deposit – lower borrowings
dis adv – you may not be able to access your funds if you then wish to use some of them for other purposes eg investment/travel/repairs etc.Read widely & seek professional advice.
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