Guys,

need some opinions, is it now time to fix my homeloan? I paid 7% variable now with Homeside. They offer 3 year fixed for 6.54% and 2 year for 6.49%.

Michael, you might know how much is the cost to fix homeside variable ? Currently my loan is IO. Can you do fix on IO ?

It is noted here that the comparison rate for 3 year fixed is 7.24%, what does that mean?

Finally, settlement took place two days ago, I am officially a first-home owner. So far I have mixed experience. In term of inspection, property search and negotiation, I found the articles I read elsewhere are overly complicated. I did only inspection for 5 properties in one Saturday, and that's it, the first property I inspected, the one I finally bought. I did only one offer, agent wanted lil bit more, and my second offer was accepted (within my budget and estimation). Maybe because now it's buyers' market.

I am happy with the purchase, it's all worth it.

With the mortgage broker, not too bad, but not perfectly happy as well. Same with the solicitor. In the future, I should find better ones.

Final question, what sorta documents I should have or my solicitor should send it to me from the settlement? So far I got nothing.

Thanks guys for all the helps. Michael and Terry especially.

So from what I understood yesterday from Terry’s explanation, just top up what we need for one IP, and top up again later in half or one year for another IP. Is it correct ?

I think I know the reason, it is because the dwelling is a townhouse with 20 sqm front yard and 36 sqm paved with fence backyard. Even though there are similar townhouses there, my property is located 150 metres from soccer field, playground, childcare and small marketplace (which honestly, my wife and I did not know before, because they are located in front of other townhouses in the complex). The potential is good.

I discussed with my wife yesterday, and revaluation of that property is a good way to invest more later. But it raises another question, how often actually we can get a property revalued for the purpose of releasing some equities?

Michael,

I just realised though, with loan split for IPs like that, that means it is almost impossible to achieve positive CF, because you have to pay the principal as well on the half of the loan, means your repayment will be quite significant. So when you actually look for a property for an IP, you have to disregard the principal component for the calculation. Otherwise it is impossible to find positive CF properties. One more thing, your plan works if you don’t have any loan on your PPOR, but if you still have a chunky balance on your PPOR, I guess, better not to split the IPs and repay the PPOR first. Is it correct?

Ferdinand

What you were saying is if I buy IPs and make it IO, don’t use an offset account attached to it ?

If say it I get it topped up, and free up 30k and use it as the 10 percent of the IP, as a separate loan, will the interest on it also fully deductible?

Hi Guys,

Now I am waiting for the settlement. The tenant has indicated to be able to move out on 13th, and settlement can take place on 15th. That means 4 days later than original expected settlement date, which I am fine.

For the time being, I am thinking about what will happen in the next 2-3 years. My loan structure is Interest Only for 5 years. I understand that the purpose is flexibility in case I want to change the dwelling to become IP and tax benefit of it. But I don’t think we will rent out that place. The reasons are below:

1. The property as an IP ,won’t be a positive cash flow property by its own. The vacancy rate will be definitely low, as it is located 300 metres from a well-known university. But the rental rate won’t match the the interest on the loan. Unless I use my offset account to reduce the interest charge. Mr.Excel told me that it will be -600 to -800 p/month. But one think I’m pretty sure, the capital growth will be above average.

2. I personally like the property, and when I bought it, I was doing calculation and consideration as a PPOR. That means, I don’t care about rental yield, undervalued property, etc. But I know clearly it is not overvalued and it is not a lemon.

Based on those reasons, I think if I want to create wealth in the foreseeable future, I need to buy IPs somewhere else and that means (what I know), getting my PPOR revalued and top up the loan, with little help from my saving, I should be able to buy more. My wife and I are not ambitious or obsessed of having 100 properties. We think about 3-5 manageable, safe (capital growth and vacancy rate), and low to medium risk properties (including PPOR). Which means one or two negative CF properties will be fine as long as it meets those conditions mentioned above.

My wife personally is not comfortable (like most of people out there) at seeing our offset account getting bigger and bigger, and it is a transaction account, which she is worried about the safety. We were arguing about this, and she might want to repay the balance of the loan in case no investment plan in 3 years. We have done our calculation since beginning, if we make extra repayments, the whole loan balance will be repaid in 6-7 years (if nothing major, unexpected and unpleasant happened of course).

My question is, is the structure still good for this plan? (i.e. free up some equities and use it for the IP purchases). Any pros and cons will be great.

Many thanks

Ferdinand

I don’t quite understand with this contract works. It is said, the settlement takes place 42 days after exchanging the contract. So it is binding or not ?

Vendor needs to give 30 days notice to tenant, it is binding or not ?

I am actually really frustrated with my current place I am living. One bedroom for one couple to live (12 sqm). And another bedroom for all of our things. We eat, we watch TV, we study are all in a 12sqm bedroom. It is really really frustrating. Before I got married, it was perfectly fine, but now, a couple’s life boxed in a 12sqm bedroom, you know how frustrating it is.

Can I let him to live there until 11/8, then force him out ?

So if the property is not vacant till September, I have to wait the settlement till September?

Hi Terry,

I don’t sign any contract with the tenant and that property is legally mine, if settlement took place, that means if he insists to live there, I assume, it works like someone lives in your house without your approval. So I guess as a reasonable person, should I call police?

My solicitor mentioned before if the tenant couldn’t find a place or does not want to move at 11/08, then we won’t settle… I don’t understand why it becomes the purchaser’s problem. Therefore I am seeking opinion and advice here, I want to know what is my legal right and how to enforce my legal right.

Cheers

Ferdinand