Most IO loans are IO for the first five years only then principal payments apply.

An LOC is IO for the term of the loan.

Some folks aren’t too concerned with paying off the debt. They allow inflation to reduce it accordingly.

If my parents had never paid off their home loan they would still have a $30K debt on their Sydney home…..

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Well your repayment choices are P&I where you pay down the principal or remain IO where you don’t. IO can be paid for up to five years with most lenders.

It is really your choice. If you have any non deductible debt then I would strongly consider you stay IO until that is paid out.

IO also has the advantage of maintaining cashflow.

Many people prefer P&! as they enjoy the knowledge that the debt is being reduced.

Re the reduction in tax.

http://www.ato.com.au/businesses/content.asp?doc=/content/31199.htm

PAYG income tax withholding variation (ITWV) is what you need. I still know it as the old section 221D but the name has been changed to the above.

I have elected not to use it myself as I prefer the lump sum refund as opposed to a weekly instalment that dissappears into our living expenses[]

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Cornel,

The banks will not be able to use this informal rent unless you have declared it on your tac return. There are a few lenders who do but they are in the vast minority.

Let me suggest that instead of trudging from bank to bank you avail yourself of the services of a good mortgage broker.

Please call me if I can be of service.

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

CornelBasson,

Work out your pos/neg gearing on your purchase price. That was the cost to you. You should add the cost of the reno to that to indicate it’s true cost.

If you have lived in this place for three months as a home then you shouldn’t have too much trouble with the FHOG. There is no set timeframe required for residing in the place and anectdotal evidence suggests any auditors will ask for three months proof of residency – I trust everything is in your name and you get your mail there?

If you have any concerns then check with the Office of State Revenue or your state’s equivalent.

Don’t make any assumptions as to why the sales on the other apartment fell through – ask the agent why. It may be because of low valuation but it also may be a number of other reasons.

However a sales price of another unit will indicate the value of yours. Valuers use comparative sales to set their valuations. Sales in the same building will have a strong influence on their assessment.

Can you get a 100% loan for the next deal? If your place is worth $159 000 that means you should be able to readily access up to 80% of it’s value or $127 500. This will form the deposit and costs for the next purchase. Of course your income and the rental income will influence how much debt you can service. If you want specific advice then drop me an email with your financials.

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Kay,

This is pretty unusual in my experience. I can only think that your valuer had little comparable sales data available to form his opinion.

Can I ask which bank it was you used? Is the property located in a rural area?

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Combine this with new door and cupboard handles esp in the bathroom and kitchen.

there are some very cool marine type steel fittings available that look very expensive.

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Agreed Westan.

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Westan,

I never suggested that yield was an absolute indication of a good deal or even a useful way to compare deals. I personally use it as a quick check on whether I look further.

I just suggested a way to keep it all a bit more straightforward esp without introducing another variable such as deposit size.

I personally run the numbers though a spreadsheet which takes nearly all income and outgoings into account to give a result – a bit cumbersome to cayy in my pocket though!

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Some people use their loan to calculate yield.

This is cheating in my eyes[]

The worth of the deal shouldn’t change according to how much cash goes in!

In this case any deal can become cash flow positive if enough deposit goes in!!

Yield is simply weekly rent times 52 divided by purchase price times 100.

ie rent x 52 / price x 100

or 220 x 52 / 180 000 x 100 = 6.355% yield.

Hope this helps.

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Gracey,

You are half right. The loss on the property is offset against your income not your tax. So for every dollar you lose on the property you get back 31.5%, 43.5% or 48.5% depending upon your tax bracket.

Remember it is only the interest component of your loan repayment that is deductible. There are many other costs claimable including non cash expenses such as depreciation of the building and fittings.

Repairs are deductible, capital improvements not etc etc.

If you wish to pursue this path then some reading may well be in order.

Cheers,

Simon Macks
Mortgage Broker
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.