Hi,
I have about 70k which I would like to invest. Currently I have a mortgage of approx 370k. Any ideas as to how I should invest this money. I was thinking of buying a "problem" property and renovating or a positive cashflow investment. Some people say just put on your mortgage.
Any ideas would be great.
Regards,
Steve
Hi Steve
Welcome to the forum and I hope you enjoy your time with us.
Personally i would never use cash or personal savings for investment especially when you have non deductible debt.
If you are wishing to use the funds for investment you would better off to pay down the home loan by $70K and then take out a separate investment loan for the same amount. This way the interest on the loan becomes a deductoble expense against your against your other income as the purpose of the funds was for investment.
Many lenders think you can merely use a redraw facility however this structure does not help you separate the debt and the interest will be contaminated.
Your Mortgage Broker should be able to set the structure up correctly for you to avoid future issues.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for the advice.
Regards,
Steve
While we are on this topic I thought I’d seek clarification too. We have $30k ready for our next deposit. We contacted our mortgage broker this week and he suggested putting the 30k on one of our IP loans (we have 3 on IO) and approaching the bank for a 100%+ costs loan. I was confused by this as:
1. They are IP loans and so the interest is a deductible expense
2. Being IO loans they have a limit of $5000/yr in surplus repayments or you pay a penalty for paying extra
3. Wouldn’t the bank be more inclined to give us an 80% than a 100% +costs loan?What do you think?
Thanks
Ruth
Hi Ruth
Welcome to the forum and I hope you enjoy your time with us.
Why oh why oh why would you ever pay a lump sum into an investment loan and then borrow 100% of the total cost.
Firstly the only way to do this is to cross collateralise the securities, secondly you would look to place it in an offset account if you didnt have a PPOR loan and thirdly you would use it as deposit rather than pay it into the loan assuming the other 2 points were clarified.
I have to say it doesnt sound like your current Mortgage Broker has any idea about investment structures especially if he / she is suggesting you cross the loans.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for that confirmation Richard. Glad to know I was correct when I thought his advise sounded completely insane. Now to suss out a new mortgage broker!
Ruth
Hi Ruth
If you want to shoot me an email i am happy to give you some unbiased advice.
i do own the odd IP myself so understand what an investor needs.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Why oh why oh why would you ever pay a lump sum into an investment loan and then borrow 100% of the total cost.Took the words right out of my mouth!
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]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
