Amy I truly do wish you good luck in whatever you are doing. My aim was to share with Draconis and anyone else interested, a way to earn money that was helpful to other people, where a uni student could arrange their shifts around study time and earn a $40K+ income working part-time as a first year uni student. Just one idea. An opportunity to earn over $30ph on a weekend taking clients to the movies or the beach and assisting disadvantaged people to be more independent, seemed to me to be an OK suggestion, and worth some investigation. It is what I did to pay my way through uni, and I do it full-time now even though it is not the field I studied. And I truly love my job and would probably do it even if I was already rich enough not to work. I earned over 80k last year in wages (lots of over-time), and loved it. But that is just me. I know there are other ways to go that will be better for other people, and I have other goals which will be more fruitful and of more service to the community. The advice from other contributors to this thread has been great.
Anyway, I am glad you also love your job, and even though you were suspicious of my original advice to Draconis, I trust that you now know I was just trying to be helpful. In truth I will not work the extreme number of hours every week that I have been working in order to make the wages I have been getting, when my investing becomes fruitful enough. But in the mean-time, I enjoy helping people and getting paid well to do it.
Having said all that, Amy please share with us what sort of job you would most enjoy doing, and how close is the one you do now to meeting that criteria?
I am truly sorry that I reacted badly to your earlier post and hope we can let go of our need to be right, and share a little bit about our lives in a non-argumentative way. At the end of the day, that is the best gift you can give anyone, because it is yours.
Regards,

Bravesparrow

hi there again,

My understanding on this subject may be flawed but this is my best attempt to explain it.

100%offset means that a bank account is buddied-up with your loan and your minimum loan repayments are deducted from it, but your entire offset-account balance is deducted from your loan amount in the daily interest calculations .

So let’s say on a 7.5% interest only loan of $160000, your monthly re-payment is $1000. Now let’s say you get your wage and throw $2500 into your offset account just prior to repayment. Next day $1000 has been deducted from the account to pay interest on the loan, leaving $1500 in the offset account. The daily interest owing on your loan is calculated something like this:
amount owing / annual interest rate / days in the year. On the offset account in the example above, the daily interest would be calculated with the amount owing being $1500 less (the $1000 repayment was just for the interest). So the greater the daily balance in the offset acount, the less interest accumulates each day, and your periodic repayments are reduced accordingly.

Interest payments on a loan for a principle place of residence (PPOR) are non-tax-deductible, and need to therefore be minimised, while interest payments on investment loans are tax-deductible and not such a bad thing.

The money in your offset account saves you on this non-deductible expense while it is your PPOR, but when it becomes an investment property you can simply withdraw that money and use it for deposits on other investments, or put it into an offset account attached to your next PPOR loan.

Any flaws in this explanation, please let me know, as my wife and i intend to make use of a 100% offset loan for this purpose soon, and would appreciate any further advice.

David.[shades2]

Bravesparrow

G’day,
Good on you for getting into the game mate. My knowlege of property investing is not huge but I can pass on what I do know. Please check anything I say with other people as I am not an expert.
Steve McKnight puts it like this: you need three things to invest in a property: 1. A property; 2. A deposit; and 3. Finance.
– Re: 1. Properties, you do need to get out and talk to agents and scour the internet sites like realestate.com, and you do need to develop the skill of calculating which deals are worth pursuing. Becoming an expert in a particular locality is a great thing and often the best deals are found close to your home. Of course people will react differently to you due to your age, but are you going to let that stop you? Check out the local paper and walk through a few open home inspections, and for all the agent knows you have a big inheritance in the bank and plenty of knowlege about how to spend it. All the same ask plenty of questions and keep having a go, just like you have tonight by posting this topic. Finding properties is a function of the time you invest, and being a young person you have plenty of time.[chill]
Re: 2, Deposits, You generally require a Loan to Value Ratio (LVR) less than 80% to avoid the need to take out Lenders Mortgage Insurance (LMI). Put another way, you need a deposit greater than 20% of the value of your purchase to avoid LMI. LMI is a cost which you pay for and recieve no benefit for, as it only covers the risk to the bank of you being highly leveraged, with no ability for you to make a claim yourself should your investing go wrong. Having a high LVR on your credit file also puts a limit to gaining further finance. So let’s say you have $10000 saved up for a deposit, you could then go and borrow $40000, and this would take you to an 80%LVR with the value of your property at settlement being $50000. In other words, take your deposit and times it by 5 and that is the maximum value of the properties in your price range which most lenders believe you can afford (or take your deposit and times it by 4 and that is the maximum you can borrow).
Re: 3, Finance, You would need a taxable income to get a loan in your own name. Generally if you divide your annual taxable income by three and times that figure by ten, that is the maximum loan that most lenders consider that you can safely service. So if you were earning a gross income of $37000, your maximum loan most lenders would see you able to service would be about $123333 ($37000 x 10 / 3), remembering that this would also require a deposit more than about $30833 ($123333/4) to keep your LVR<80%. Using different types of trust structures and focussing on cashflow positive deals, one can overcome these lending limitations, but the need for a 20% deposit on each deal becomes paramount in order to keep one’s credit file under the radar.
So in answer to your question re the $250000 property, in order to avoid LMI you would need a deposit over $50000 and you would need a taxable income over $60000 to borrow the remaining portion.
Heavy duty hey! [crying]
I’m 32 and still have not yet entered the market myself, but my wife and I do earn over 140000 a year in our jobs, and have about $185000 tucked away for deposits.
You will be doing much better than us in 14 years time I am sure. One day at a time increase your knowlege, clarify who you are and what you want to be, and be persistent, and you will have access to more opportunities than you can presently imagine.
Good luck with your studies, too. I envy people who choose financial studies early in life. My experience of the workforce is that one can earn a lot more money, if the job relates to the management of money. My studies were in health sciences, and really have very little to do with how I earn money today. I earn a good wage by working enormous loads of over-time in the job I do – social worker for a govt department. Bet too that your career in the end will differ greatly from the path you originally choose to study. Main thing is, spend less than you earn, get that money compunding for you and be of service in the field you choose to pursue, and you’ll have no dramas buying <edited>loads of property, with all the knowlege you will persistently gain in the next few years.
cheers, David.