Hello Cresta76

I am not a mortgage broker nor an expert on interest rates but I just had a quick look at the ANZ site to see what the rates are for a personal loan and an equity loan.

The personal variable loan was 13.17% while an equity loan was 8.57%.

Seeing as you have so much equity in your old PPOR wouldn't it be possible to get an equity loan against it or maybe even better, increase the mortgage as this would have an even lower interest rate, instead of paying the much higher personal loan interest rate? Of cause this extra loan would not be tax deductible as it will be used for personal debt, but your current personal loan isn't either. If you increase the mortgage you will have to have it structured correctly so that you can easly seperate the deductible interest from the non deductible.

I would certainly not sell a property that is appreciating nicely and is CGT free for up to 5 more years at which point  you move back in for a few months and then start another 6 years. Check this part with your accountant.

I also think that at your income and with no rent to pay you should be able, with some budgeting, to clear this personal debt quite quickly, specially at the lower interest rate.

Cheers
Elka

Hello Terry

You may have read it on the ATO site. Here is the link to the appropriate section

http://www.ato.gov.au/individuals/content.asp?doc=/content/36888.htm

but unfortunately they specifically exclude the scenario above

"If you could not move in because the dwelling was being rented to someone, you are not considered to have moved in as soon as practicable after you acquired your ownership interest."

Doesn't seem fair.

Hope this helps

Elka

Hello All

My first comment is that it's easier to criticise (and cheaper) than to create and offer such a site for others to use.

Steve, thank you for offering this site. It's certainly faster and remembers me. Two positives.   

Since you wanted suggestions I am contrubuting this list of some of the things that I really miss. Will add more when I come across anything else.

1. A member profile with at least as much information as on the the old site. It was very handy to see who you were talking to and at least where they are from.

2. The list of your own and other members last posts, in the member profile area as before.   

3. All the posts since you last logged in. I prefer them seperated into the different areas, as before, and not just one list.

4. The search function is not as good as on the last site.

5. It was very handy to be able to see if a PM you sent had been read.

6. After you post you get taken back to the first post in the thread rather than to the place you were at when you posted.

Hope this helps
Elka

Hello IJO

Why don't you go to a good lawyer for advise. I would.

Good luck
Elka

Hello Lucy

Nicely done. 15% shows a good saving habit though of cause I don't know over how many years. 

Yes renegotiating your loan would help you reduce your repayments but then naturally your "redraw money" would no longer be available to be redrawn again. Also changing it froma PI loan (principle and interest) to an IO loan will also help in this. An 100% offset account where you deposit all your wages, linked to this morgage, would also be a good idea. It would not reduce your repayments but it would reduce your interest so effectively you would be repaying some principle each time. At the same time the savings in this account would be usable for whatever you want. 

You should also get a depreciation schedule drawn up, specially if your appartment is not very old, as this will help you reduce the out of pocket cost of keeping your appartment. Also a good accountant.

What you should do is all a bit dependent on what your goals are for the future. Are you interested in being a property investor? Are you interested in trying to keep this appartment and still buying another property in the future? If so, you should not tie up the "redraw money" as this could be the start of a deposit for another property, whether another IP or PPOR.

I don't know which lender you are with or what, if any charges/penalties would be associated with changes to your mortgage. Maybe a good mortgage broker, who is also at home with investing, may be able to help you structure your loan correctly for the future and reduce costs of doing so. Certainly worth asking your lender and then also consulting a MB. There are some on the forum who would be my choice. 

Hope this helps
Elka 

Hello LucyofOz

"The reason I ask ‘theoretically’ is I believe I may have inadvertently removed that option:  I redrew most of the extra repayments I had made on my mortgage because I was expecting to sell imminently & therefore figured the whole mortgage would be paid down once that happened so I might as well put my extra payments to work in ahigh interest account. 

Does this mean there is NO WAY I can now make ANY of my interest payments deductible if I rent it out?  Is there anyway around this?"

Surely at least part of the interest will be tax deductible.
Lets say loan $200K
Extra payments which you redrew $40K
This will still leave you interest on $160K to deduct I should think.

If you want to deduct the interest on the part you redrew as well you could always put it into another investment…. for example blue chip shares.  As Terry advised speak to your accountant.

" If I’d just invested those extra payments elsewhere in the first place I wouldn’t have this problem…"

Or if you had just put these extra payments into an 100% offset account linked to your mortgage you would have had the same effect (i.e paid less interest) and still not had this problem when you moved the funds out of the offset account so as to be able to claim the interest on the full mortgage. I love offset accounts.

BTW Unless you have a fixed interest loan taken out when the rates were very low, I can't think of an account that will pay you a better interest rate than that you are paying on your mortgage. Add to that the fact that you will pay tax on the interest earned ( in this new account ) without getting a tax deduction for the extra interest you pay on the mortgage while you are trying to sell the house, this seems like a not so good idea, unless I am much mistaken. 

Cheers
Elka     

Hello Chris

If you mother in law does not understand your concept why don't you just see if she would accept/understand selling it to you on vendor finance at a friendly interest rate…. 4 – 5% may be reasonable ….  for current market value. 

The advantage to her would be that she would be rid of the problem and getting an income on an asset that is currently not earning anything. On top of that her equity in this asset is being literally eaten away by the termites she is unwilling to take care of.

Good luck
Elka

Hello CJ

I don't know anything about Meadowbrook but I think just jumping in on a gut feeling without doing your DD is more like playing the lottery than investing. Gut feeling is good if everything else checks out first. Just MHO. 

I checked it out quickly on realcommercial.com.au and came up with 157 different properties for sale there. It looks like a brand new industrial complex with good highway access according to the ads. I think the problem will be to get a tenant quickly. Many are advertised to sell or lease. The return, at least that of the properties advertised for sale or lease is around 7.8% which is pretty normal for a wharehouse/ office but since there are so many unless you know that the demand for the area is very high it may have to drop to attract a tenant.

It sounds like you are looking for high LVR. My worry would be holding costs. I once had to wait 9 months for a tenant. The thing to remember about industrial property is that the rent can drop dramatically in an economic downturn. You have to be able to weather both those situations. 
 
I'm not trying to discourage you. Just saying that if you've invested only in residentual IP till now, then take the to time to educate yourself on commercial investing first..  It's a whole different ball game.

Hope this helps
Elka 

How much does one needs to retire on comfortably, in todays dollars, is a question that I have been mulling over for some time so last month, when I was having a meeting with my tax accountant, I asked him that question. I added that I didn't need any Mercs or BMWs but that I also didn't want to be forced to check out the specials at the supermarket. A comfortable rather than luxurious lifestyle with the odd diners out, holidays etc. etc.

The answer I got was $1500 per week after tax. That's $78K per year after tax.  Of cause, if your a baby boomer like me, the easiest way to achieve this is to put as much as possible into a SMSF  (and that can also be in the form of commercial property) because the tax free aspect of that income means you need to earn less to get more.

Hope this helps 
Elka