You took the words right out of my mouth wilko!  Agree 100%.

Remember to factor in the cost of your oven, hotplates, rangehood, sink, taps, and electrician and plumber labour costs to get everything installed

A better approach is to take the following attitude : "I am happy for service providers I use (such as Accountants, Mortgage Brokers etc) to earn a quid on my deal if it is the case that they are knowledgeable people, and they area making me wealthier through their knowledge.  Further, I am pleased to find that because my service provider is so knowledgeable, he cannot help but to spill valuable knowledge during the course of regular dealings such as completing my mortgage application.  I could not possibly expect to hear such nuggets of information from people with no knowledge that offer their services for free or close to it.  I am thrilled that I am learning along the way just by having this service provider on my team." 

Surround yourself with people smarter than you if you wish to prosper.  You are the product of your environment.  Would you rather have a portion of something, or 100% of nothing.  All those sorts of phrases are what you need to think about when you are trying to save yourself $100 and in the process losing the ability to position yourself to earn tens of thousands. 

As is often said, mindset is so important in investing.

Be aware that your insurer will charge you a higher premium if you opt to self-manage

Have you considered investing in property via SMSF (Self Managed Super Fund)?  Either way, it is still possible to get 100% lend on certain properties.

Hi Ryan

A couple of other things to address: are the loans on your first property fixed or variable interest?

Is there any mortgage insurance in the equation on the first property?

Why are you thinking of selling?  A decent whack of money goes down the toilet selling down to then buy again (between capital gains tax and reinvesting the cash in another place where you have to pay stamp duty).  It's easier to get ahead leveraging equity as you have done to purchase again.

Hi David

Why wait?  I am assuming your loan is on variable as opposed to fixed (an offset won't help you if you are on fixed).

The MISA account (essentially an offset account)

You have $19k in your offset.  The standard variable interest rate with the Commonwealth is 5.9%, and for the sake of the exercise, let's pretend interest is calculated annually rather than daily because it is easier to demonstrate the calculation in a forum post.  Putting $19k in the offset account would save you $19,000 x 0.059 = $1121.  (In reality this figure would be higher since interest is calculated daily and compounds. The true figure is $1154.63)

Comparing this to the Smart Access Account:

The interest rate on this loan is 0.01% per annum.  So you would earn $19,000 x 0.0001 = $1.90. From this figure, tax would be deducted because interest earned in a regular savings account is considered to be income.  Let's say you are in the 37% tax bracket.  Your tax would be $1.90 x 0.37 = $.70.  So you would actually end up with only $1.20 in your pocket because $1.90 – $0.70 = $1.20.  Let's not talk about what it would cost you if somehow this modest $1.90 in interest managed to just tip you into the next income tax bracket.  You would actually lose money rather than make money.

So your choices are:

Open a MISA and put the $19,000 in there and you will save $1154.63 in a year.

or

Leave it in the Smart Access account, and you will save $1.20.

There is quite a big difference between $1154.63 and $1.20.  The difference is $1153.43.  That can by you a brand new oven if the oven in your IP breaks, and there will be a couple of hundred dollars left over.  Or it can buy you a return flight to an international destination.  Free holiday.  Nice.

When you end up with a big pile of money in an offset account (or MISA in this case), you could:

– Pull the money out and use it as a deposit on another property

or

– Go on holidays with it

or

– Pay some bills

or

– Leave it there with the eventual goal of the balance of the offset being equal to the amount you owe on the property, so that you end up paying zero interest (which is sort of the same as having paid off the loan)

or

etc etc.

The difference is that you don't have to ask anyone's permission to withdraw it, and you can do whatever you like with the money.  You can buy $19,000 worth of shoes if that's what you want.

With a redraw, it is new borrowings as the boys have already pointed out.  You have to "apply" for getting your own money back you see, and there will be a fee for doing so.  And the answer to your request might be no.  Just think if you had lost your job and thus in the eyes of the bank, you had no way of repaying the redraw.  They could opt not to give you the money.

Hope this helps clear a few things up.  I think you would be crazy not to have an offset account (or MISA) and store as much of your spare cash in it as you possibly can.  It is essentially a place that you can earn tax-free interest, at a much higher rate than is on offer in a savings account, and it doesn't increase your taxable income (so doesn't put you at risk of creeping into the next tax bracket).

Annoying isn't it!

I find I have that problem in Internet Explorer but not Firefox, so maybe try a different browser.  Otherwise go through the oddly archaic exercise of typing out your post in Notepad and then copy and pasting it across into propertyinvesting.com

Good evening! 

As the others have mentioned, it is a government fee not a bank fee.  That says, such a fee applies to each and every property transaction so it would be nice to thing your bank/lender would ensure you understand how things will pan out.  Whilst there are some banks that are absolutely fabulous with response times and customer service, they are certainly in the minority, and a dying breed.  If you find an individual in a bank that is a suitably qualified individual that is at all interested in your application long enough to explain something to you, i would absolutely love it if you'd drop me a line to let me know who it was and who the lender was. 

On a more positive front, it is helpful to take the attitude that you expect that when you acquire a property there will be 2 or 3 thousand dollars of unexpected expenses, whether they be bank or government fees, or something in the property requires a repair.  Consider it a cost of doing business, and remind yourself that you get to borrow a bucketload of money and allow someone else (ie tenants) to pay it off.  This enables you to keep focussed on the main goal, and not get too upset about each thing that comes along that is unexpected.

Hope this helps!

Hi MrEskimo

For that pricerange, you'll likely be looking in the outer Western suburbs of Sydney.  That said – remember… it is an investment property.  You won't be living in it.  It therefore does not need to be just down the road from where you are living.  You could for instance acquire something interstate with an appropriate pricetag and yield.

ps Remember you can also acquire property through a SMSF (Self Managed Super Fund).