Hi All,
I have just found this site as my husband and I are looking at our options for moving interstate.. (from VIC to QLD)
We currently live in our own home which is mortgaged – $250K owed and valued at $400K.. so about $150K equity. Our minimum repayments at $430 per week.
Our real estate man has told us that we could rent our home out for $400 per week.. so $30 short of our minimum repayment amount..Our dilemma is what to do in regards to our living situation once we move..
I am not working at the moment as we have a 9 month old baby, plus 2 other children (3 and 5 yrs). So our combined income would be around $75K in total.. and we'd be looking at paying about $400 a week in rent/mortgage repayments once we move..
Would our equity be worth anything to us if we looked at buying something instead of renting.. I'd just hate to be paying $400 a week in dead rent money if there was an alternative..
Any advice would be appreciated
You could use you equity to buy something and stay where you are. Moving may assist in your claiming slightly more back in tax in the short term however you have to weigh up the hassle of moving out.
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
Firstly hope you enjoy the move to Qld.
Please dont tell everyone as we like to limit the weekly number moving up from Victoria.
As Terry has mentioned you certainly could access some of the available equity but you need to remember there is a difference between usable equity and actual equity.
If your current loan is not interest only loan you could look at converting it to an Interest only loan and then even consider fixing the rate of interest which depending on your current rate could save you a considerable amount (there are some excellent deals around at the moment).
You would look at splitting the loan to save you interest and then take out a new loan with a separate lender for the new purchase price. You could also look at transferring the property to your husbands name to maximise the available interest deductions (Stamp duty maybe a consideration but couple of options there) and dependant on the age of the property could look at whether it is viable to have a QS report undertaken.
Your mortgage broker should be able to advise you of the options.
Anyway enjoy the move and we will try and lay the sunshine on for you when you cross the border.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi and welcome to the Forum!
Richard mentioned a very important point- usable equity. What this mean is …yes you have equity but you need to convert this equity into “cash ” or an mortgage as such, so really you need to be able to afford to service this extra debt.
I done some very very basic calculation ( just based on 3 depends and an 75k income + rental) and i would say you will NOT be able to afford an $350-400pw mortgage, – but if you contact a broker ie Richard he should be able to give you a more accurate figure on what you can and can’t achieve.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Thanks for the replies everyone..
We are looking at moving to live closer to family so would have to pay $350-$400 a week in rent anyway.. thats where my confusion begins
I figure that if we can afford to pay it in rent shouldnt that also mean we could afford it as a mortgage repayment.. especially as we would be effectively paying $100 – 150K deposit (with our equity).. or doesnt it work like that?
We only have our current mortgage ($250K) plus a car loan ($8K) and zero credit card debt.. so we dont have excessive outgoings..Sorry if i sound like a bit of a dumbo, I just dont want to bother going to a broker and wasting their time if theres no chance of us being able to do anything anyway..
Thanks again for your advice
HI there
Yes you are right that as long as you both feel comfortable in affording the repayments you should be fine. Course also factor in the added expense of Insurance, Rates etc.
Whether a Bank or lender will agree with you is a different matter as they all have slightly different affordability models.
As long as the useable equity is sufficient and dependant on whether the interest on the car loan is deductible and the rate of interest being charged you might even look at taking out a separate sub loan (course like to be non deductiblle) at home loan rates paying out the car loan to further reduce your montly expenditure.
Take the sub loan cover the same remaining term as the car loan (or take it over 25 years but set the repayments at the same rate as you are currently paying to increase serviceability) and this willl save you more interest each month.
The rest of your assumptions are correct.
Just make sure that your husbands new employment position doesnt involve any form of probation as that will limit the number of lending options.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
