Hey guys.. first post here and as usual i have a few questions that i would like some advice on. Just finished reading steves book and it has opened my eyes to a whole new game to start playing..
Ill start off by explaining my current situation.
Im a 32yr old married male with 1 child. My income is quite high 120k base and most years it comes back at 140kish. I have just recently bought my first home for 320k and currently owe 300k on it with 20k in savings in the bank. I am the sole provider for the family as the mrs stays home with my child. Credit rating is all good and dont have any other debts bar hecs.
What i want to achieve is to buy a few houses this year which are positive and continue doing this over the years to come. My first question is;
Have i screwed my borrowing power by buying a house in joint names and is there a way to refinance to a trust run by a company as me as the guarantor? Secondly is there any need to do this, and if so what would be the best structure to achieve the results that i am after?
Sorry if you have heard this all before but i am completely new to this and i am lost as to the details following the information i have learned in steves book.
Any advice would be great :)
Howdy @elileon welcome. First up the journey of investing is fun, long, and yes it is great to open your eyes to the possibilities.
The mortgage brokers lawyers and accountants can speak with more detail about structuring solutions etc. I will keep it brief, to answer your question, yes, in the short term you have impacted your borrowing capacity by buying that home. BUT – if it is your home, and you enjoy living in it, then that is worth a lot. So be happy. The great thing is it is not a million dollar home, but something affordable. And you have great income to support the mortgage payments and family plus investing assuming you keep cashflow under control.
The most pressing need I see is deposits. You need some. So in the short term, save hard. If you have access to another source of deposits, these can be found at low risk great. But if nothing else, keep reading, and learning, and save for 6 months and you will have your first good deposit. Voila! Not sexy but a plan, and yes, saving is how I and most other investors started. The more drastic approach would be to sell your home and rent and save faster, but with no real equity gains it is kinda pointless to sell it, given you will just end up paying someone else’s mortgage off instead of yours.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
What i want to achieve is to buy a few houses this year which are positive and continue doing this over the years to come. My first question is;
Hi and welcome aboard
The banks typically look at two main things – your borrowing capacity and deposit.
Your borrowing capacity may be ok (I haven’t crunched the numbers) but the deposit side of things may need to be worked on.
At present – there’s no equity in your current property that can be accessed. That could change in the future if it goes up in value.
That leaves you with using savings – but realistically, $20k isn’t going to stretch too far in terms of a deposit and it’s also important that you hold onto some savings as a safety buffer.
I wouldn’t transfer your owner occ property into a trust/company structure.
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]
Howdy @elileon welcome. First up the journey of investing is fun, long, and yes it is great to open your eyes to the possibilities.
The mortgage brokers lawyers and accountants can speak with more detail about structuring solutions etc. I will keep it brief, to answer your question, yes, in the short term you have impacted your borrowing capacity by buying that home. BUT – if it is your home, and you enjoy living in it, then that is worth a lot. So be happy. The great thing is it is not a million dollar home, but something affordable. And you have great income to support the mortgage payments and family plus investing assuming you keep cashflow under control.
The most pressing need I see is deposits. You need some. So in the short term, save hard. If you have access to another source of deposits, these can be found at low risk great. But if nothing else, keep reading, and learning, and save for 6 months and you will have your first good deposit. Voila! Not sexy but a plan, and yes, saving is how I and most other investors started. The more drastic approach would be to sell your home and rent and save faster, but with no real equity gains it is kinda pointless to sell it, given you will just end up paying someone else’s mortgage off instead of yours.Hey mate thanks for the reply.. no it dosent sound like an attractive plan but it is what needs to be done which im aware of. The house we are currently living in will not be our family home and the intention behind buying it was to use it as an investment property later on. Im currently saving for deposits and am not looking to do anything right away as i still need to save. In my head gaining equity in this home and saving is my number one priority but thats as far as the thought process goes atm.. i joined here to get a better understanding of what my next step shall be as being ine step ahead and knowing where your going is very important.
What i want to achieve is to buy a few houses this year which are positive and continue doing this over the years to come. My first question is;
Hi and welcome aboard
The banks typically look at two main things – your borrowing capacity and deposit.
Your borrowing capacity may be ok (I haven’t crunched the numbers) but the deposit side of things may need to be worked on.
At present – there’s no equity in your current property that can be accessed. That could change in the future if it goes up in value.
That leaves you with using savings – but realistically, $20k isn’t going to stretch too far in terms of a deposit and it’s also important that you hold onto some savings as a safety buffer.
I wouldn’t transfer your owner occ property into a trust/company structure.
Cheers
JamieIs there a reason you would change this property into an trust/company structure. This property will eventually end up an investment property and although ive probably started out the wrong way can it be transferred across?.. im guessing it will cost..
The cost being paying stamp duty and any other government charges all over again, and if you’re more than 80% LVR LMI all over again.
Great way to burn 10’s of thousands – for what benefit?
A lot of people like the sound of having things in trusts, but generally cannot articulate what the actual benefits for them are vs the costs. Trusts can be very handy for those with substantial portfolios in certain States who want to minimise their land tax, and for high litigation risk professions. For most other people – it’s likely to be overkill.
Focus on saving as much funds into your offset account as possible for your next purchases. Dependent on the timeline for you to change the existing PPOR as an investment property and whether you buy another PPOR, it may benefit in running a debt recycling strategy. Fundamentally it’s all going to come down to your ability to save a significant amount of funds towards your next purchase before the wheels start turning.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
The cost being paying stamp duty and any other government charges all over again, and if you’re more than 80% LVR LMI all over again.
Great way to burn 10’s of thousands – for what benefit?
A lot of people like the sound of having things in trusts, but generally cannot articulate what the actual benefits for them are vs the costs. Trusts can be very handy for those with substantial portfolios in certain States who want to minimise their land tax, and for high litigation risk professions. For most other people – it’s likely to be overkill.
Focus on saving as much funds into your offset account as possible for your next purchases. Dependent on the timeline for you to change the existing PPOR as an investment property and whether you buy another PPOR, it may benefit in running a debt recycling strategy. Fundamentally it’s all going to come down to your ability to save a significant amount of funds towards your next purchase before the wheels start turning.Cheers cory i appreciate your input.. as a newbie to all this stuff i understand that i have a whole lot of learning ahead of me. I also cant wait to understand all the differenr setups you can possibily use.. for example; debt recycling (as you mentioned).. i have not heard of. A quick google search to understand what it is are like tiny little snippets of gold that will eventually come all come together.. i learned something from your post and i thank you for your reply.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
