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Thanks for the info all.
Although we are in a bank war so to speak, i was surprised when I went to apply for the bankwest premium they did not want to waive the appl fess, even though it was only one day after the promotion ended. Are bankwest really that content not to have business? I thought they would be ok with it (it's a $700 app fee), but instead i'm now looking at other options. The Aussie broker i was dealing with wasn't able to assist either. Are these things really not negotiable???
propertyinfo
Terryw wrote:propertyinfo wrote:Interesting reading here, thanks everyone for their posts. I have an example here where I think it shows the advantage of an offset account:Me: 100 000 cash, no properties owned
Buy first house as holiday house (say 200,000 to buy), put 20,000 deposit, 80,000 in interest only offset account– – -2 years later- – –
Buy second house as residence, move 80,000 to my new mortgage (PPOR), and rent out holiday house as a full time rental (20,000 left on investment property).
In this example is an offset account with interest only the way to go? Assuming I will buy an investment first and PPOR second, it seems this my best option. Happy to hear some comments though.
Are there any drawbacks for this method? Can the holiday house still purchased outright the same way or are there catches with the IO offset account?
Also, can the offset account be used to 'tune' the repayments to match rental income?
ie – holiday house mode: low rental income/high deposit/low repayments
– full time rental mode: high rental income/low deposit/high repaymentsI assume that i could change from holiday mode to full time rental (or vice versa) at any time? Would this be possible?
Any advice would be greatly welcomed
Offset account and IO would be the way to go. As you say when you buy a new house you just take the money in your offset account with you to the new one.
The only time I wouldn't recommend this set up is if you are temped to spend money lying around in your account. But even then you should not have PI on an investment if you still have personal debt.
Thanks for the info Terry. I spoke with a broker about the situation above, and he said to consider a PI loan vs IO+offset, but based on my knowledge (limited) i can't see an advantage of PI for this situation. Is anybody able to explain the pros & cons for each in this case?
Interesting reading here, thanks everyone for their posts. I have an example here where I think it shows the advantage of an offset account:
Me: 100 000 cash, no properties owned
Buy first house as holiday house (say 200,000 to buy), put 20,000 deposit, 80,000 in interest only offset account– – -2 years later- – –
Buy second house as residence, move 80,000 to my new mortgage (PPOR), and rent out holiday house as a full time rental (20,000 left on investment property).
In this example is an offset account with interest only the way to go? Assuming I will buy an investment first and PPOR second, it seems this my best option. Happy to hear some comments though.
Are there any drawbacks for this method? Can the holiday house still purchased outright the same way or are there catches with the IO offset account?
Also, can the offset account be used to 'tune' the repayments to match rental income?
ie – holiday house mode: low rental income/high deposit/low repayments
– full time rental mode: high rental income/low deposit/high repaymentsI assume that i could change from holiday mode to full time rental (or vice versa) at any time? Would this be possible?
Any advice would be greatly welcomed
