Hi Tom,

Thanks once again for clarifying that – and for all your input on this thread!

Absolutely, I understand that serviceability is only one part of the overall assessment – but I'm also glad I understand now how that works at least.

Cheers

Hi Tom,

Yeah I downloaded an Excel calculator and kind of worked out that it seems to be a default living expense based on single/couple and number of dependents – cheers for confirming though.

Given they would assume our expenses are per couple then, do they also use my wife's income to assess affordability even if the title and mortgage is to…[Read more]

Hi Tom,

Thanks for this – yeah now I've got an understanding of how DSR is calculated thanks to you guys, I will try to work out NSR and use that instead.  A quick google shows there are a few NSR calculators available to download – I will check them out.

Just as an aside though, when you mention DSR doesn't take into account marital status -…[Read more]

Hi Tom,

Thanks for sticking with me and replying again!  Between yours and Derek's responses, I've got it now – as mentioned above, this is pretty much what I thought initially, I just didn't word it very well…  I always assumed that lenders would use the LoC limit rather than the drawn-down amount when used in any calculations, I just wasn't…[Read more]

Hi Derek,

Many thanks for this very comprehensive explanation – I really appreciate it!

I understand now exactly what you mean.  The way you've described it here is pretty much what I thought was the case initially, I think I just worded my initial question badly then misunderstood your responses…  This is excellent, thanks again for…[Read more]

Hi Tom,

Sorry to labour the point here, but as a novice trying to work some stuff out I just can't get my head around what you and Derek have mentioned regarding the way LOC loans are regarded in terms of affordability calculations.  I hope you can stick with me a little longer and help me out again please…!

It's likely I didn't word my…[Read more]

Hi Tom,

Thanks for that.  Dammit I thought that may be the answer re DSR & offset, for the exact reason you mention – lenders would probably assume you're going to spend the lot on something else…

Hmmm ok, didn't know DSR was old school sorry – my starting point for this journey was a book my dad gave me recently, I don't think it's very old,…[Read more]

Hey Derek,

Thanks for replying!

1 – No worries hopefully someone else can advise on the DSR question.

2 – Cool thanks, I thought that'd be the case.

3 – Sorry by 'term' I meant length of the loan rather than another name for it!!!  As in, is there a standard length of time you take a LOC loan over, so I can work out what the minimum I/O…[Read more]

And hopefully when I do get round to talking to him at some point, he will recommend this.  In the meantime though I was simply trying to build some knowledge so I could hold an intelligent discussion with him, and work out whether he is a 'good' broker or not.

Cheers

Ah ok, wasn't sure if you meant my whole original post, or some later specific points…

Yes I'm sure my financial professional will help, thanks.

Hi, sorry not sure what you mean Richard – was this in reply to my original post or a later one…?

Cool thanks Derek, I've never heard of this – will check it out and see if it applies to us.

Thanks again, much appreciated!

Cheers

Will do Jamie, thanks again for your help.

Cheers!

Thanks Derek, I am indeed better armed thanks to you and this community – I look forward to discussing further with my advisor now!

Cheers again.

Cool thanks for that Jamie – sounds like a LOC is the way to go then…

I will give our broker a try first – he certainly seems to know his stuff from earlier discussions – and I feel I'm well enough armed now with some ideas to run past him, and will be able to tell fairly quickly if he knows what he's doing or not.  If not, I will check our…[Read more]

Oops one other thing I thought of but forgot to ask in the last post…

Assume we're at a point where we do have some equity in our house and are going to use $50k to fund the deposit for an IP.  You mentioned taking a line of credit loan – is there an advantage to doing that over simply redrawing the funds?

Cheers!

Yeah I know, our LVR is currently far from ideal – but all planning will take this into account.  Thankfully we have the big chunk of savings to work with, which will be a massive help in getting us started with a good structure and approach.

Our advisor is the director of Port Finance in Melbourne – a company that has a few different…[Read more]

Ahh ok I see, that makes a bit more sense now – the goal of doing the approach you mentioned is essentially to minimise the mortgage required for the new PPoR whilst maximising the tax advantage (or minimising the disadvantage I guess!)…

We're not dead set on having 3 x $400k properties, that's just a rough idea at the minute – perhaps the best…[Read more]

Hi Derek,

That does indeed help, thanks!

I wonder if you could help with explaining one last thing a little bit more though please…  I still can't quite get my head around why it's better to keep as high a debt as possible on our current PPoR and convert it to IO immediately (thus restricting our ability to purchase say 3 x $400k IPs any time…[Read more]

Hi Derek,

Thank you for the very comprehensive reply – and sorry to all for my post being so long in the first place!

You make some very good points – can I please clarify though…

You suggest we should convert to IO straight away and run an offset account alongside it, but use a line of credit loan to fund any IP purchases (rather than…[Read more]