lol – it's an understatement for a guy who owns an IP or two.

Cheers

Jamie

Thanks for the kind words Jac M

Jac M is spot on with maximising deductible debt.

Is your current loan set up as interest only or principle and interest?

If you're looking to purchase a number of IPs in the future, I'd look to spread your $130k over multiple IPs using smaller deposits – but this is a broad statement and I have no knowledge of your situation or tolerance to risk.

Cheers

Jamie

Hi Mich

Welcome aboard.

In regards to selling your current home – that's only a question you can answer. Is their anything that suggests it could be a good investment over the longer term?

With buying a "stepping stone" type property (ie. live in and then rent out) it's important to set your loan up correctly from the start so you don't pay down future deductible debt. This article explains the concept.

Cheers

Jamie

Hi Luke

Welcome aboard.

To determine whether a loan is tax deductible we need to apply the purpose test.

What is the purpose of the loan? If the increased borrowings are going towards your new PPOR, it won't be deductible.

However, the current debt against your property should be once it turns into an IP (providing all the redrawing of cash you mentioned was done via your offset account).

You need to make sure this is all set up correctly for you. I have no doubt that your Westpac banker will cross up both properties and make a mess of your loan structure.

Cheers

Jamie

Hi Dave

If you want to reduce your repayments to improve your cashflow then just convert to interest only and make additional payments into an offset account rather than paying down the principle.

You can get a much better rate than what you have now. There are also some lenders that will provide you with a cash rebate to cover some (if not all) of the costs associated with refinancing.

Obviously a lower rate will also lower the repayments – and it would make quite a difference on that loan amount and your current rate.

Cheers

Jamie

6.68% is really high.

Depending on the loan amount, sub 6% on a variable rate should be possible at present.

What's the loan amount and value of each property?

If the combined loan amount is greater than $250k and the LVR's aren't in LMI territory than you can certainly improve on rate.

But as always – it's not all about rate and the sub 6% loan may not work for you.

Cheers

Jamie

Be careful about paying off your PPOR debt as quickly as possible.

I see way too many clients who aim to achieve this – and then decide that they want to covert their PPOR into an IP but have paid down a massive chunk of their mortgage.

So what's wrong with this? In short, when their current property turns into an IP, the loan against this property is generally quite small (as they've paid down a considerable amount of the principle) – which means they can only claim a small amount of interest.

Careful planning will get around this.

Cheers

Jamie

It makes a difference. My sister in law recently sold her house privately. She staged it with some borrowed items from friends and family – once everything was in place, it looked amazing….and they ended up selling the property for about $25k more than they had expected.

Even the valuer was impressed with the look.

Cheers

Jamie

Yes – that ad in Belgium is amazing. I remember it doing the rounds last year.

Alright – time to get work done!

Cheers

Jamie

Give it a shot – you have nothing to lose.

Cheers

Jamie