YoungInvestor wrote:
The unit has wooden floors so hopefully no pet smell,

I can personally attest to the fact that enough cat/dog pee on floorboards, especially left to sit (like while mum and dad are at work), will soak into the boards.  It's a liquid, wood is porous – even if the floorboards are sealed it's probably not good…[Read more]

oops, double post

Glennsa wrote:

Sitbon09 wrote:
1.  re ;'thus cross collatoralising and avoiding mortgage insurance'.  How does this work?2.  What is PPOR?

In basic terms, banks will typically loan you up to 80% of the purchase/property value without hitting you up for mortgage insurance (remembering mortgage insurance does NOTHING to protect the bo…[Read more]

Sitbon09 wrote:
1.  re ;'thus cross collatoralising and avoiding mortgage insurance'.  How does this work?2.  What is PPOR?

In basic terms, banks will typically loan you up to 80% of the purchase/property value without hitting you up for mortgage insurance (remembering mortgage insurance does NOTHING to protect the borrower). In my case I was…[Read more]

Qlds007 wrote:
Certainly you dont need to cross collateralise the securities to be able to borrow 100% + of the purchase price of any new property and it is a strategy we would rarily recommend.

Yup, I have gone against the norm and will look to avoid in the future.  I'll be honest and say this time we were a little lazy with how we have go…[Read more]

G'day Paul,

PaulTextor wrote:
Do you mean that you will be paying aprox. $100K in extra repayments in the next 12 months, i.e., around $2K per week?

Yes, our minimum $400 a week repayment + $650 a week rent from the IP + additional payments of another $825 a week totalling $1850 a week will pay out our PPOR mortgage by the end of next year.  A…[Read more]

Hi James,None of your three options mention staying in the townhouse and using the equity to fund a purchase/s, or do you not want to live in it anymore?Our IP purchase that is underway at the moment has involved taking out loans to 105% of the purchase price using our current equity as collatoral (thus cross collatoralising and avoiding m…[Read more]

Quote:
On the tax issue, I guess it doesn't hurt to ask for a private ruling, but if you were a betting person, you would imagine the answer would be 'no way'. Best of luck though. Let us know how you get on if you decide to get a private ruling.

On Thursday we saw an accountant who specialises in property investment and I asked about the priv…[Read more]

The General wrote:
I'm sorry. I read the whole post including Terrys links. What am I missing. How can the loan repayments drop from $400p/wk to $52p/wk when the same loan amount still exists and the interest rate is roughly the same? And how can one pay off $140k with a $650p/wk rental and a $100k line of credit? (One must remember that I am…[Read more]

Thanks Terry & Richard, I really appreciate the time you have given me.mxd, when I first heard of how this is supposed to work I thought it was risky as hell, primarily because I didn't know then what I know now.  That's why I have been asking the questions and doing as much research as I can.  In my more educated (although not professional) op…[Read more]

Thanks for the information, Terryw.  The legalese is starting to do my head in, but I think I understand the "issue" is that when they were capitalising their interest, they were claiming a deduction on not only the interest from the IP loan, but the interest on the interest in regards to the Line of Credit – so a double dip as it were.  Also i…[Read more]

Thanks for the link, Terryw.  While I appreciate it is a private ruling it is still further information that it is a valid strategy.  I would be interested in a basic explanation of why it could/would be seen as a tax avoidance scheme – or is it because you're paying down your own mortgage some people wouldn't then claim the rent as &q…[Read more]

Thanks for the reply, Richard.  It was your posts I was referring to re the LOC for the 20% deposit.For this first one we are looking to be mortgage free on our PPOR in 12 months and certainly for future IPs your advice is something we will look at very very serisouly.For what it is worth, have fired just now fired off what will hopefully be a…[Read more]

As an update my bank finally got back to me.  I was asking a question about interest only property loans and whether we could make additional payments if we wanted to.  The answer was as long as on a variable rate (not a fixed contract) then no problem, just nominate the account you want the interest to be deducted from as a minimum and make any a…[Read more]

Who pays for it when it is blown up? Glennsa

Thanks for the reply, Terryw.Certainly not looking at it from a tax avoidance perspective, solely from a paying down my PPOR as fast as possible perspective.  I'll have a look through your previous posts as I am wanting to get as much information about this as I can.  Thanks again.p.s. for the record we will have everything going through an a…[Read more]

Thanks for the replies, Proasset and Matt.In theory it all looks to be gold – an IP at zero out of pocket costs for the first 12 months with a more than serviceable debt at the end which can also be refinanced into the IP as its capital grows over the next few years (making some assumptions about growth of course).Mentally my sticking point is…[Read more]