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Thanks Derek.
Yes the property is negatively geared.
My mortgage broker advised me to put both our names in the loan application as he said that it would make the bank more comfortable with lending the money, He said "you can still claim all the deduction – it would make very little or no difference if the loan was solely under your name" – I just want to know if what he is saying is true or not.
Hi
Interest rate is set at 8% to account for increases in interest rates.
From what I have heard, 8% is the average for property management in Canberra. I could be wrong.
Thanks to everyone – I now have a better understanding of IP.
I am still a little bit unclear on how LOC works. Below is my understanding.
Say, the equity on my PPOR is $160,000 and my IP loan is $400,000.
I assume that this means that my LOC limit will be set to $160,000.
Let us say that the repayments for the $400,000 IO loan is around $1000 per fortnight, out of which the tenant pays $300 and the tax man pays $300.
I can either pay the remaining $400 off my savings, or I can pay it from the LOC. If I pay it from the LOC, the next fortnight, I would have to pay $400 + interest on $400.
Is that how it works?
Thanks
Mike
Thanks for the quick response – That was really helpful.
See spreadsheet below to know how I came up with the $450 per fortnight amount
I used http://www.allhomes.com.au/ah/act/sale-residential/11-revell-close-gordon-canberra/1316797481111 as the basis for my calculation (i.e, Property worth $400K fetching $400 rent per week).
