Many thanks for your advice, Terry.

I will definitely stress to my mortgage broker to avoid cross collateralisation if this is what he had planned. Will also mention the LOC you advise of and see what he has to say.

I realise I sound like a complete amateur when I post this, but I am new to this and my mortgage broker sounds like he is speaking another language.

These were his exact words, if your good self or any other posters who are familiar with this topic can translate for me in laymens' terms:

"How it would work you would keep your property at $200k and continue to pay that P&I and try and pay that down as you are doing, because there are no taxable benefits involved with your principle place of residence.

Then you would borrow the full amount plus stamp and settlement costs as they are tax deductions on your investment property.

If you bought for $300,000 for example you would borrow $315,000ish. The loans would be $200,000 plus $315,000 : Total Approx. $515,000. Values Approx. : $815,000 Loan to value ratio of approximately 63%, so well out of mortgage insurance territory."

Does this sound like he was trying to set up finance so it would cross-collateralise, or perhaps it isn't clear from his wording?

Many thanks

Hi all,

First of all, thanks for all the inputs.

The reason why I want to start now and don't want to (well I can at the same time) reduce my debt is, I plan to buy my first IP, then after considerable amount of time of holding (1-2 years), I can benefit from capital gain (not negative gearing, aiming at positive gearing or neutral), then sell the property off for capital gain to reduce my debt, or keep holding the property, release the equity out and buy another property, rather than keep savings and savings and pay the debt off. Well of course, that is depends on the location whether or not is it a good capital growth area. Due Diligence.

And yes, there are upside and downside to this strategy of mine, I can just put all these savings I have at the moment and close all the bad debts, but my thought is why don't I benefit from property and invest first? I can continue to save money after I buy the property at the same time.

I might have to speak to mortgage broker out about whether my debts will bring down the borrowing power or not. If not then I will go for joint names, if yes it will affect the borrowing power I will get my friend to be the sole owner with agreement contract behind that.

Question is how much will it cost my friend and I to obtain this agreement contract and from who? Solicitor? Lawyer?

Thanks guys.

Regards,

Nue1

I just built an investment property in QLD and it’s now rented out. I used a national buyer’s agent to set the deal up, as I’m in Vic. I was expecting the rental income to be just over $400pw, but they ended up rented it for $445pw on a 2 year lease in the first two days.                                                                                                                                                                                                                                                                                                The house and land price added up to $438,000 and I owe the bank around $449,000 (purchase + Stamp Duty on the land + costs, etc). The bank valuation on completion was $462,000. I have an interest-only mortgage, with an offset account on this investment property. The offset account has approximately $36,000, but I will soon receive $9,000 from a rebate the buyer’s agents negotiated for me, which will be added to the offset.

My annual income is approximately $85,000 and I have put in a tax variation. The property is cash positive by about $30 pw before the offset is taken into account.

So here is my question, should I let the $45,000 stay in the offset account or should I utilise this money in another way?

BTW: my mortgage on the PPoR is $420k or 40% LVR

Any suggestions please.

Regards,

Hi,

Just wondering if tis is an option or makes sense?

thought about greeting a loan with a line of credit.  It is for our home not an investment.

we have enough money to deposit into the lin of credit for it to be a zero balance from the get go.

is this a sensible option, are we missing anything, or is their anything else we should be asking the bank about!

cheers.

Morning,

I'm wondering now whether setting up an 100% offset is perhaps the best path?

Would the benefit be in paying all my income into the variable loan and then using a 40 day interest free credit card for daily purchases.

Then from the offset account paying the credit card?

or paying all income into the offset, and then paying for the PI variable loan and credit card from the offset when it falls due?

This is for PPOR.