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  • Profile photo of PLCPLC
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    @plc
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    Yep, owning is usually better than renting in my opinion, especially when you look at it from a long term point of view.

    Normally as time progresses, your salary increases, but so does rent. Say in your case it increased by 5% per year, in 10 years time rent would be close to $2,000/month. So depending on your salary increases, the ratio of rent you pay compared to salary may stay the same.

    With buying, your monthly repayments are dependent on the interest rate at the time but unless there is a huge hike in interest rates over the coming years, it will generally be around the current amount give or take $100/month or so. So as your salary increases over time, your ratio of repayments compared to salary should decrease meaning more cashflow for you.

    There is also the added bonus of your property increasing in value long term giving you a tidy profit when you sell.

    Obviously the above is generalised as to what should happen, not what will.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Profile photo of PLCPLC
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    That applies particularly to family, for some reason they think they have a right not to pay it back.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Profile photo of PLCPLC
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    Just on ANZ, the ANZ Simplicity product isn't eligible for any discounts, you're thinking of the Breakfree package which is available on the standard variable rate. Also their fixed rate products only allow a certain set amount for extra repayments before penalties kick in, and there is no redraw facility until the fixed rate period ends, and offset feature is only available for the one year fixed product.

    With your deposit, 5% of it needs to be classified as genuine savings which usually means 3 months in a bank account, so if you're looking at a $350K purchase, $17,500 needs to have been in that account for the previous 3 months.

    If you're looking at renting it out in the future, not recommended to pay it off as quickly as possible, generally should be IO with offset so that 1. You can save more in your offset for your future PPOR purchase. 2. Benefit from the deductible debt when it becomes an investment.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Profile photo of PLCPLC
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    Doesn't the tenant know that summer is coming up? Next they will complain it's too hot and want cooling in every room.

    My opinion, they aren't committed to a long term lease, why should you commit to them? Like others have said they saw beforehand what they were getting into, no use whinging about it now. Tell them to sign a 12 month agreement at a higher rent to make up for the costs involved and then you will do it.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Profile photo of PLCPLC
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    What you have to remember with pre-approvals is that they are not foolproof, and depending on the situation and lender may be worthless.

    For example, getting a pre-approval online by punching numbers in isn't worth a grain of salt. Neither is going to a lender who only credit score.

    Others whose credit team see the file and do a bit of an assessment are a bit better, but as you find out from the pre-approval letter you are sent, it will be subject to conditions once you find your property meaning unconditional is not guaranteed.

    The other thing is not to go around chasing pre-approvals with multiple lenders, can damage your credit score.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Basically as Derek put it, a negatively geared property will reduce you taxable income at the end of the financial year, and a positively geared property will increase your taxable income at the end of the year.

    The total loss or gain is not actually how much tax you will get back or have to pay. That all depends on what tax bracket you are under and is calculated using that.

    You could theoretically have a negatively geared property, but still have to pay tax at the end of the year and vice versa depending on what you have done during the year.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Ha ha, almost got caught out myself Jamie.

    When I first clicked on the link and read the first post I thought ANZ were out of their minds. Then I saw the date of the post.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Correct, interest can only be claimed against the $218K. The $50K will be non deductible debt.

    You need to make sure the two loans are separate so that you don't have a mixed purpose loan.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Economists predicting the share market are the worst. Never ever take what they say into account, they are hopeless.

    Being an economist and meteorologist are the only jobs I know where you get paid a mint, can stuff things up regularly and have no backlash against you.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Terry, as a hypothetical what if the money was paid back into the PPOR loan (which is 100% investment from what has been advised), and withdrawn at a later date. No mixed loan from what I can see, so should be fully deductible?

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    From what I recall, it's the person whose name is on the title who gets all the benefits. So if the wifes name is the only one on title, but the loan is in two names, it won't matter as all income and expenses would be attributed to the wife.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Don't know how your investments are structured, but if the investments are P&I repayments, changing to IO will free up some cash which can be diverted elsewhere.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Why are you against your wife's name on the mortgage?

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    With normal personal funds in an offset, this would be okay (repay, then withdraw with a separate account), however I'm not sure what the scenario is with borrowed funds. I'm sure Terry has a better idea.

    Also why would you repay it into the IP loan and not the PPOR loan? By repaying it into the IP loan you are losing deductibility.

    Cheers,

    Tom

    PLC | Phoenix Loan Consulting
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    When you look at suburbs to invest in, you need to look at the wider picture and see what they offer.

    Are there enough roads to handle traffic flow, does it have suitable public transport, schools, shopping centres, etc? If not, are there any master plans to expand on these? This goes a long way to securing capital growth in the future.

    Likewise as others have mentioned demand for properties. Less demand means lower prices but also means less growth in the future.

    Those are reasons why the places mentioned aren't looked upon as good investments.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    paradigmv,

    Why didn't you leave any excess borrowings undrawn in the equity loan instead of moving it to the offset account? Someone can correct me, but as funds have been moved to the offset account, the initial purpose is not for investment purposes, so any future interest in not tax deductible.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Hi interested,

    The tax deductibility will only apply to the property that is rented out, therefore if you move into the new property, the interest on the current loan of $255K will be deductible, whereas if you rent out the new property, the loan on that will be deductible.

    The reason people pay interest only on investments is that they like to pay off their non deductible debt first (i.e PPOR). Anything above the interest is diverted to the PPOR loan, most likely in an offset account. This allows you to pay your home off quicker while achieving maximum tax deductibility from the investment.

    Your broker should be able to structure this correctly for you.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    @plc
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    Personally I'm not a fan of that area, however you are limited with your budget on where you might be able to afford.

    In the end, even though you are looking for future capital gain you will be living in the property long term, so you will need to be comfortable with where you decide to buy and like the area.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    With a fixed rate loan, there are restrictions on the extra repayments you can make, and offset accounts.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    @plc
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    Richard is right Scott. However I do notice you do say we a few times in your post. Do you maybe have a partner who's income might help for serviceability?

    Also you mentioned 5 years ex bankrupt. Is that 5 years since discharged or declared bankrupt?

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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Viewing 20 posts - 301 through 320 (of 399 total)