HELLO,
I am 27 yrs old and starting to look at testing the waters of investing in property,
My motivation is simply an interest in property and the possibility to enjoy a diciplined social life while funding a principle place of residence and have an investment property or 2.
My position in a nutshell is that 5 years ago i purchased a unit in penrith nsw , i borrowed 170,000 then and now owe 130,000
The unit is valued at 200,000 and if it were to be rented it would return $220 a week
I have very basic concepts of the negative gearing principle but i have to re-finance in 4 months and my partner and i are looking to buy a principle place of residence for around 300,000 and dont think we will particularly be able to come up with a sufficient deposit in time.
So i am looking for any advice as to what is the best way to handle the re-mortgaging situation keeping in mind if renting out my unit is a good option
Thanks alot
Hi Stuart
Welcome! There are some very knowledgeable people on here who will no doubt suggest things you haven't even thought of, including what structure to purchase the new home under.
Just a gentle suggestion – your subject and post content are all in capitals which is considered the internet version of yelling, and it can offend some people. To ensure you get everybody's input to your situation, you might consider altering it to mixed case rather than all upper case.
Best of luck!
JacM
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Stuart
Depending on your current lender, you might be able to refinance your current home loan up to 90% of its value. This will give you about $50k which you can use as a deposit (and purchasing costs – stamp duty, ect) for your $300k PPOR.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
STUART WILSON wrote:HELLO,
I am 27 yrs old and starting to look at testing the waters of investing in property,
My motivation is simply an interest in property and the possibility to enjoy a diciplined social life while funding a principle place of residence and have an investment property or 2.
My position in a nutshell is that 5 years ago i purchased a unit in penrith nsw , i borrowed 170,000 then and now owe 130,000
The unit is valued at 200,000 and if it were to be rented it would return $220 a week
I have very basic concepts of the negative gearing principle but i have to re-finance in 4 months and my partner and i are looking to buy a principle place of residence for around 300,000 and dont think we will particularly be able to come up with a sufficient deposit in time.
So i am looking for any advice as to what is the best way to handle the re-mortgaging situation keeping in mind if renting out my unit is a good option
Thanks alot
You probably realise now that you shouldn't have paid down the loan – you have locked up $40,000 in an investment property which means you need to reborrow it to use on the new PPOR. This may cost you around $800 pa in extra tax. over 30 years with compounding this could be costly.
So learn from your mistake and take a IO loan for the new property. Don't pay the loan down in case you move out later. Use a 100% offset account to save interest instead.
For the deposit I would set up a new loan on the unit, borrow as much as you can and get this as a separate loan. Use this as deposit and get a 3rd loan for the remainder. Use only the new property to secure the 3rd loan and only the 1st property to secure the 1st and 2nd.
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
Terry has taken the words out of my mouth.
Keep the loans separate for a number of reasons one being the LMi will be cheaper if you mix it around.
Gave a client a quote today between the Bank we had recommended and CBA who he had gone to previously and there was $1300 difference in LMI. His CBA Banker told him not to worry about it as it was Tax deductible however i told him to tell the CBA to cut the premium by $1300 and you would go to them or "adios amigo".
Structure it correctly and you can still get what you want.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for the info,
So if the units value is 200,000 and i owe 130,000 it would be best to use that equity for the deposit on the new PPOR but have the 60 odd thousand as a seperate loan and then another loan for the remainder of the PPOR value of around 250,000 which will be an IO loan.
Forgive my ignorance just the mention of three lots of borrowing threw me off, from my understanding would it be advisable to keep the units loan as an IO loan for maximal tax benifits
Hi Stuart,
Both Richard and Terry (who've posted above) are really knowledgeable in this area and handle this sort of thing regularly. Why not save yourself a whole lot of grief and get one of them to be your broker? That way you'd get it right
JacM
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Yeah i was planning on contacting someone thanks
Hi Stuart
You're on the right track – as mentioned above, a good broker will be able to structure it correctly for you.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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