Thanks mate, i talk about anything.

Hi Matt

Firstly welcome to the forum and I hope you enjoy your time here.

Personally would get proper advice before you jump in as in most cases the PPOR is purchase as Joint Tenants with you both equally and severally liable for the debt.

Given the information you have provided about your intension to eventually rent out the property both the structure of the loan and the name on the title needs to be considered.

Remember if you intend to rent out the property you would want the loan structured on an interest only basis and therefore it would be wise to do this from day 1. Many lenders will not accept an interest only loan on your PPOR but a good mortgage broker should be able to help.

Secondly as the interest will be tax deductible once the property is available for rent then you want to ensure that you keep your gearing level up and do not want to be using too much of your funds as deposit. A 100% offset account will give you the same net interest saving yet protect the deductuble statius of the loan down the track.

Now onto the title.I assume that when your wife leaves Uni she will obtain employment but probably still be on a lower marginal tax rate than yourself. Consider buying the property as Tenants in Common with you holding say 90-99% of the shares and your wife the balance.

This will give her peace of mind when it comes to the asset ownership but also assist you down the track if the property is negatively geared and you need to claim the majority of the deductions in your name only.

Drop us an email if you need any further information.

Hi Kate

Maybe I will clarify what i was suggesting:

1) If you set the loan up from day 1 as a P & I loan and then 5 years down the track decide to move to a bigger home but want to rent out the old PPOR the only interest that is tax deductible is the amount charged on the balance outstanding. You cannot redraw or refinance and try and cliam the additional deductions.

2) If you utlise an offset account with an interest only loan the net interest effect is the same as it would be with a P & I loan however you have the choice and flexibility. If you decide to do as we suggested in 1) above you would switch the offset account to your new PPOR loan and the interest on the full amount of the orginal loan becomes deductible on the old PPOR.

3) If you do not have enough equity and have cash sitting in your offset account and are wanting to purchase new IP then certainly you can pay down the capital and then take out a new LOC on the original property and use this to cover the deposit and acqusition costs on the new IP. The interest on the IP loan and the LOC is deductible as it satifies the TAO "Purpose test".

Whatever you do whilst you have a loan on your current PPOR do not use cash as a deposit and where possible try and avoid having the loans X collateralised.

If you start off with good habits they will last you a lifetime.

Hate to disagree with what other forum members have written but normally I would recommend an Interest Only with a 100% offset account for clients and their PPOR loan.

There

maybe

Hate to disagree with what other forum members have written but normally I would recommend an Interest Only with a 100% offset account for clients and their PPOR loan.

There

Hi Janelle

Yes i must indeed take exception to some of their practises.

Only at the start if the week did i have a client ring me who had set up a PIT with them and then was asked did they wish to be referred to their mortgage broker for a fee. (Yes the client emailed me the letter as i thought it was disgraceful and didnt believe her) . Sure charge through the nose for your Accounting work but do not charge clients for referring them to a MB.

They went elsewhere to a NSW Broker who then wanted to charge them in the event that they obtained finance and they decided to go elsewhere. Fortunately for the client the Broker could not place the deal and therefore I placed it for them without any fee charged whatsoever.

I also have many FP clients who are Ex C & N clients and who I believe have been charged ridiculous amounts for their annual returns and Tax and Financial Planning.

What gets me is that an organisation seems to think it ok to charge like a wounded bull and then wonder why other Professional refer their clients elsewhere and clients do not return.

The other think you notice is how when times get quieter all of the new brokers come out of the woodwork and appear on forums. When times are busy they do not have time to answer forumites questions but when the pendulum swings they are here every minute.

If you knew anything about me you would now  about my background and would be aware I come here purely to assist forum members and answer questions and do not come to ply my business and tout for new clients.

I just dont like to see clients get ripped off by any organisation.

Avi

Havent spoken to Chad for a week or wo but why not drop him an email

[email protected]

Hi there

Yes a Nodoc style loan would assist in this situation whereby income evidence is not available.

On the portability front this is possible however with a securitised loan the purchase and sale settlement dates would need to be simultanous as you cannot use a term deposit account as security.

I agree form filling can be a pain sometimes.

Kate

Rather than paying off the loan you should be paying interest only and be utilising a 100% offset account.

Whilst accessing equity will help you in your goal to purchase another property the underlying factory is serviceability.

Make sure that you structure the loan correctly otherwise you may have an issue or 2 when it comes to lodging your Tax return and trying to apportion the deductible interest.

You mortgage broker should be able to assist in this respect if he or she is investment orientated.

Think it will still be tight but all depends on the fixed price figures when it comes to construction etc.