Hello! I am a first time user to the forum and not up on all the jargon but I am looking for advice regarding my options with a view to getting a few investment properties under my belt.
My partner and I purchased an older style house in Feb10 in my name only with Principle and Interest repayments. We have just recently split and I am thinking of renting the house out as I can't justify my staying there by myself (I have paid him out his share on our 4brm/2bth house). It is also in a rural mining area where rental demand is quite high at the moment so I figure it would be worth my while. I would purchase a second smaller property for me to live in, possibly 3brm unit, which further down the track would also become an investment property.
The financials are as followsCost – $382500
Initial Loan – $366000
Owing – $275000
Redraw A/C – $85000
Repayments – $594 (Have kept payments the same altho due to amt loan has reduced by this figure is approx $450)
Possible Rent – $600min (Have not had appraised yet but based on similiar properties in the area)I received an inheritance and put $50 000 onto the loan which I regret doing as I read somewhere that if I was to redraw this amount, because it was for personal purposes rather than investment I would not be able to use it to tax advantage if using as deposit on an IP. Am I correct there?
Any advice is really appreciated altho I guess I'm looking for almost a step by step game plan as I have no idea what I should be doing or how I should set the financials up. What is my best course of action?
Thanks and Kind Regards
Hi Jade Q
Welcome to the forum.
First things first, if this property is going to become an investment – you should convert the loan to interest only. If you leave it as principle and interest, each repayment is reducing the level of deductible debt (which is currently down to $275k).
For financing the next purchase, you could “top-up” your current loan. If the property is worth $382k – you could (depending on your lender) top the loan up to 90% of this value (which will incur some mortgage insurance). By doing this, you could potentially access around $65k which could be used as the deposit and purchasing costs (stamp duty, legal fees, etc) on your next purchase. It’s important that you set-up the $65k as a second split because you want to be able to identify your tax deductible debt ($275k) from the non-tax deductible debt (the $65k used towards your next owner occupied property).
Obviously, the above can only happen if your borrowing capacity facilities it.
I hope that helps.
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]
Hi Jade Q.
With all respect, you appear to lack a significant amount of knowledge in relation to your present and future circumstances. Yes, like Jamie above,myself and other professionals on this forum, you are only going to get this knowledge piece meal as well as it could be inaccurate due to keeping certain areas of your financials private. The best suggestion I can make to help you is to make personal contact with either one of the professionals who provide freely to this forum or, seek someone local who can assist – otherwise, your learning curve through forums and blogs may take a while.
I truly hope this has been of benefit to you.
Kind regards,
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