Another way to acheive the same outcome would be to convert this loan to interest only with an offset attached – place any extra repayments into your offset account. You can than withdraw this money at any time at no cost and no hassle.

Well 700k is great. So 700k / 25 years (minimum life span after retiring) = 28k a year. Some people may be happy with this, but after earning 200k a year then it may not quite cut it.

Just saying, is all!

D

Hi losty, your case made me really look at the numbers.

It's so simple it's almost idiotproof.

$9000 p.a. = $750 p.m. x 2 = $1500 p.m.

Accrued         interest          tax saved
$1500            $6.25              $31.25

$3006.25       $12.53           $31.25

At the end of 15 years, the total accumulated is $744430.50

That doesn't include the tax savings.

Essentially, by each partner paying $130 – $150 per week into an smsf & not doing anything more except ensure it's in a high interest [daily rest internet acct will do it], by the time you're 50, you'll both have close to a million in cash.

Is that so difficult if you're earning $100K each?

KY

Firstly about this personal loan for the car.  What is the interest rate on that compared to the homeloan interest rate?  In other words, would it be better to pull money out of the homeloan offset account, or redraw on the homeloan, to pay out the car?  If this is possible and the rate on the homeloan is cheaper, and there are not big penalties for paying out the car early, maybe look into this to save yourself some money. –Yes the car loan interest rate is higher than home loan. But we own two cars with remaining amount of $45000 on them.

Something else worth looking into if your household salary is high is: is it better to own the car, or is it actually cheaper to lease it on a salary-sacrifice arrangement, thereby saving on income tax? – I looked into it and got our accountant to advice. It doesn't save that much currently to go on salary sacrifice. His advice was to put more into your super to save tax than salary sacrificing the car. Another option is to have an IP. If it's a negative cash flow property, tax can offset some of it.

Personally, I would address these two questions first.  I personally would probably look at knocking the personal debt on the head first, and maybe reducing the homeloan a bit more before getting another property.  Others would do differently. – Good idea, but needs to work out how.

It is by no means "too late" for you.  You are very young with a lot of income-earning years ahead of you. – Thanks for the encouragement.

Have you looked at your finances to work out how much "spare cash" there is each month after paying your mortgage and car loan and living expenses?  In other words, is there enough "spare cash" to take on mortgage repayments of an IP? – We have $30000 cash in savings. which sits in the offset account of our home loan.

Do you have a spare wad of cash to use as the deposit of the IP?  You might find it tricky to use the existing property as security for the IP, because your Loan-to-value ratio of your home is still at 87%. – We do have spare cash at hand and like to use it on IP than buying things which we dont need.

If you can  give us some extra info on your situation with the answers to the above questions, the knowledgeable folk that frequent this forum might be able to give you some more sturdy suggestions