Hi IS

As per your other post I am assuming that you cannot offset the 20K savings against the interest you are being charged on your PPOR.

Remember albeit your loan is fixed for another 18 months but 1 day that will expire and the opportunity to split the loan will be with you.

If you were a client of mine I would recommend you looked at releasing equity in your current PPOR through a LOC or similar to 90% of the current value and then taking out a totally separate IO loan with an alternative lender to a level of say 95% of the purchase price. Place the 20K savings in the Investment offset account and at least reduce some of your interest repayments.

The LMI which will be charged is considered a loan cost and of course will be tax deductible over the term of the new IO loan or 5 years whichever is the shorter.

The offset account will keep the funds at call and enable you to reduce your monthly comittment.

Once the fixed rate expires switch your saved funds and the rent from your IP to an offset account linked to the variable portion of the PPOR loan. No point in having 2 at this stage.

With regards to the type of property you should look to acquire this is a personal choice however start small and spread your risk and over the long term you wont go too far wrong.

i appreciate your comment about not wanting to use the equity in your PPOR but using your cash for a deductible expense certainly doesnt seem to make much financial sense especially when you have non deductible debt.

Trance

No problems.

Lodoc or limited documentation is a lending term where the lender requires less than complete documentation when it comes to income evidence. It is normally aimed at the self employed client who has not got his Tax returns done and is able to state an income rather than supply all of his financials. In saying that it is also available for PAYG clients.

The loan is normally limited to an 80% loan to value and the Bank or lender adopt the attitude that they are prepared to accept a Stated Income rather than supporting evidence.

Nicki

Firstly welcome to the forum and I hope you enjoy our time with us.

Although I am also a Licensed Financial Planner and certainly recommend my clients buy property this is very unusual for the FP industry unless they are receiving something out of the sale.

I dont take commissions from Property but many in the industry do and therefore understand that the person who is paying this commission is you the buyer.

My suggestion would be to do your own Due diligence and buy a property you find and have valued by the Bank rather than a property which has been referred by a FP.

The set up you mention is standard practise but one problem i normally find is that Financial Planners have no idea how to structure the loan when it comes to cross collateralising the securities.

This is probably the initial problem i find most clients have been caught up in and takes a while to untangle.

With regards to the equity position you find yourself in structured correctly you should be able to avoid LMI and also have further leverage to buy again down the track. 

Hi Nolapola

Dont want to be the bearing of bad news but i dont think you will find either of the 2 main mortgage insurers touch the property and therefore feel you will be limited to an 80% lend max.

Other consideration is the actual value of the security. If there is an element of business associated with the property you may find that the Banks valuation and yours are not the same.

Have you considered seeing of the vendor will leave some funds in the deal by way of a 2nd mortgage ?

Assuming all is ok on the valuation front even if this was merely for 10% of the purchase price it would see you through to settlement.

PK

Shoot me an email and I will be happy to work the figures for you on a non advice basis.

That way i dont have to charge you anything lol.

Mick

I couldn't agree with you more.

Thankfully i have around 14% LVR on my portfolio and with the next couple of subdivisions or strata title clocks should almost have that paid off.

It is all then just taxable income and the next round of acquisions.

Stephen

Yes it can be funneled through the Trust if the Asset is owned by the Trust.

Where are you based ? Might be able to recommend a couple of professionals in the area.

Carolyn

I am based at Chapel Hill so if you ever want a coffee shoot us an email.
I have a swag of clients in the area and sure a few of them would be up for a chat.

WA has given an explanation of 2 of the 5 main types of Trust structures.

Consult a qualified adviser prior to taking any action.