Hi Smartcube. A daunting time number 1 is, but great to see you making a move. Perhaps thinking about some more specifics, including what you want to achieve med to long term, how many properties you would like to have (and why) and you are correct in saying in this climate especially that you want something easy to tennant. I would want a better reason than knowing someone that lives in an area to want to buy there. I would strongly suggest making sure that in this price range that your rental income goes a long way to wards covering your loan interest costs as a minimum, and deciding how conservative you want to be before zeroing on an area. Many prefer to buy where they live, others could not care less. A new house and land package at the right price can offer good long term steady growth if in the right place. Have you had a look at the 'top 100' article in the latest Your investment property mag to give you an idea on what can be bought in what area for what price and the growth and rental prospects. Not a bad guide to start with.

All the best with the journey.

Cheers

THanks Terry – I have just gone through the 2012 ATO guidelines for rental property deductions and I am not as confident with my original info now. Etax itself seemed to allude to that, in that borrowing expenses were anything relating to the loan other than interest,  but even though not mentioned in the 2012 specifically bank fees, the definition of borrowing expenses does only cover on expenses and bank charges on taking out the original loan, including LMI (as mentioned deductible over 5 years) any valuation costs, etc 
SO……the sundry expenses may be a better option. I have pasted the definition from the publication of borrowing expense below, and while it will in no way affect the outcome of the claim, I do apologise if I have mislead anyone.

QUOTE -BORROWING EXPENSES
These are expenses directly incurred in taking out a loan
for the property. They include loan establishment fees, title
search fees and costs for preparing and filing mortgage
documents, including mortgage broker fees and stamp
duty charged on the mortgage.
Borrowing expenses also include other costs that the
lender requires you to incur as a condition of them lending
you the money for the property, such as the costs of
obtaining a valuation or lender’s mortgage insurance if you
borrow more than a certain percentage of the purchase
price of the property.
The following are not borrowing expenses:
n insurance policy premiums on a policy that provides for
your loan on the property to be paid out in the event that
you die or become disabled or unemployed
n interest expenses.
If your total borrowing expenses are more than $100,
the deduction is spread over five years or the term of the
loan, whichever is less. If the total deductible borrowing
expenses are $100 or less, they are fully deductible in the
income year they are incurred.

Cheers

Hi Emma,

You are correct – it does go under F – Borrowing Expenses. (Bank fees, as well as LMI if you were claiming over five years)

Cheers

Just had to read your post couple of times to get the full gist of it………and with the double employment changes, going to contracting/self employed, and on probation all while buying property I'm actually thinking your broker (and the lender) deserve some sort of award! Glad it all worked out.
Cheers, and enjoy!

Back in 2002 you would have had to either change the loan ownership name/entity, or have singe a guarantee and indemnity. So if you did neither, (or worse failed to notify then bank!!!) then they are well within their rights so it is no use being obstinate about it. THat said, normally, a lot of this stuff only gets pick up if you are trying to get another loan, or an increase or somehow changin something with your facilities.
What is your sore point? Are their cost involved? Or is it that abruptnes of a generic letter (some can be sutble as a sledgehammer) Why not contact your banker to discuss and get clarification.

Cheers

Couple of things need clarifying here I am afraid………so I will just pop a couple of F a c t s below that may clear up some of the confusion.
1) If the bank orders and pays for the valuation……um…..Yes – the valuer IS working for the bank.
2) Valuations are based on COMPARABLE sales only, and they have to 'get it right' or get into trouble. What many peple cannot grasp, is that if they go and buy a house for $300,000, then in most cases (some come in lower ) the value IS $300,00 – because that is what you just paid for it!!! Most lenders will not revalue in a timeframe less than 12 mths also for this reason – so other comparable sales can be used to gauge the value. Just had someone SPEW when their house was valued by a 'bank valuer' at $285k – it was definitely worth $320-$350k on their mothers grave et etc and all valuers were evil etc etc etc ……guess what? They just sold it 4 mths after the rant for $280k!!! Looks like the bank valuer over estimated by $5000!
3) A valuer will always ask you the purpose, as the valuation DOES come in different depending on the purpose. Classic example is for 'family law matters' (ie separations, estate, divorces etc) when generally it will come in higher than a valution for borrowing purpose….should not be too hard to work that one out!
4) I have recnelty had a clients house valued by a bank 'panel valuer' as a short form (ie more detailed) one where they were building a house on land purchased recently, and it cam in $110,00 LESS than the building contract and price they paid for the land. Why? Comparable sales – admittedly price over a mill, but the only stuff in the area that had sold recently anywhere near that price was considered superior and or on larger land areas – so it is the comparable sales that are used to base the end valuation price on.

It really is quite simple, but it can be made to appear 'over complicated'. BIt differnet (and more time consuming) than the old 'market appraisal)
Finally, if YOU sold your house at a higher price than the valuer gave………..you have just put up the value of your neighbors property.

Hope that helps

My thoughts are that IF you own you own home outright and have no other non tax deductable debt then by all means go for a P&I loan as the idea to building wealth is made up of three key items; reducing debt, increasing income, and selling/locking in a capital gain or profit which in this case you can do the first two – any other situation I/0 loans make much more sense 99.999% of the time, both for tax reasons and flexiblity, as who knows what may change in your personal circumstances or property plans.
All the best

Hi Lila,

AAMI, NRMA (RACV) and Allianz are all ok for basic Land lord policies. I use AAMI mostly, but if y ou want all the bells and whistles Terri Scheer seem to be the pick if premiums are no option and you want better cover. It's all relative.
Just make sure you have (some charge extra) rental income/default protection and check the major differences.
The main issue with the basic ones I find is that there is a maximum of $10,000 cover for intentional damage by the tennant…..which lets face it would be no good if you ever got a tennant with vandalistic tendencies. THat is the main issue with the cheaper cover, and of course any 'flood' cover, as it varies. I am noticing premiums are well up this year especially in 'flood areas'.

Cheers

Hi dbomber,

Just to clarify, and at a bit of balance to a couple of the comments……
A fixed rate loan is different to a variable in that is it a fixed contract between you and the lender at an AGREED amount – that you entered into by choice.  A variable rat loan, is a 'floating' rate.
When you get a fixed rate loan, essentially by way of example, you say "MR Banker, I want to borrow $200,000 for X amount of time for 7% and I promise I will pay you back at this amount. The Bank/lender does NOT have the funds for this type of loan – it is sourced from 'the money markets' rather than customer deposits. SO……Mr Bank says to all the rich people……..'Who wants to lend me $200,000 at a guaranteed return of 6% for x amount of time?' THey get this, and then make their 1% in this example. If you decide to break your promise/contract before it is due (the X bit) the bank then in turn has to break theirs' Obviously if rates went up to 8% you would not want to break your contract *unless you are selling or due to unforseen circumstances)  So if in the above example, both rates were 1% less, the bank still has to pay it's agreed amount to where it got the money from, and naturally so do you.
Hope that makes sense. SInce the GFC inparticular, you would be hard pressed to find any lender (including non bank lenders, who are much more restricted with this type of funding ) that will not ensure you have full disclosure of this, including information, brochures etc explaining how break costs work.
Trust me, if your loan is just over 7% it would only be recently that rates have dropped below that. How much money have you saved in the meantime?
Theoretically now is a good time to fix a loan for a few years for buy and hold properties as historically they are getting as low as they have been in 5 or 6 years. Then again……..

Re other costs ANZ and NAB don't have early exit fees, but all lendere will have discharge fees – it is an expense, and generally around $350, or more than that for credit unions etc. (attending settlement, paperwork, registration etc)

Cheers

Here's some more tips for choosing a selling agent based on experience……..
1) If they want to charge you anything other than the negotiated commission for you to let them sell your house – don't use them.
2) If they want you to pay for advertising  – as well as charge the commission…..don't use them.
3) Do not trust the actual staff member or listing agent if when you question the contract conditions they say ' dont worry about that' ot 'that only applies if……'
4) ABSOLUTELY ensure that if they have not sold your property during the exclusive sale period (say 3 mths) that you do not pay a zot if you list elswhere, or decide not to renew the sale agreement.
5) Read all the above again, and then focus on point 6
6) If they are a First National Franchise take extreme care if you have no other options, especially with the ambiguous wording of their 'exclusive sale authority (gag)' – do your due diligence thorougly in this case – any show your solicitor the contract befire signing if you see no other option than to use these guys.

All the best.