Forum Replies Created
Hey Terry,
Thanks for all that information, really helpful. My question would be this: If I purchase a 700k property as a trustee through a $250k LOC using the equity in my house (LOC funds the 20% deposit, all other associated fees with owning the house including monthly repayments), would this loan structure affect the burrowing capacity of myself as the trustee? Both yourself and Steve have said that if the property costs money to own (eg: repayment>rent), the losses cannot be distributed and due to needing personal guarantees from other directors/trustees, it will decrease burrowing capacity. However, if the LOC takes care of the monthly difference (eg: $300 a month), there’s technically no taxable loss right? I’m a bit confused about this concept so any feedback would be greatly appreciated?
Yep, I’ll definitely have a look. Thanks a bunch guys, I appreciate it :)
Hey Mark,
A fellow novice here. I don’t quite understand why renting is beneficial. Let’s say for eg: You bought a house PPOR for 700k on a interest only loan and burrow the full amount. Just for examples sake. That would result in a monthly mortgage of around $2.2k. By constantly saving and parking excess cash into an offset account, you constantly decrease the mortgage without losing money (I mean the money in the offset account isn’t being consumed). This way, you own the property (as it’s your PPOR) and keep paying less to keep the property (through the offset account) and then you’ll be able to use the equity obtained in the house in a few years to continue purchasing property. Is the purpose of renting just to live somewhere for a smaller monthly fee so it reduces your overall annual expenses, allowing you to burrow more money for IP purchases? If anyone could clarify this, I would really appreciate it :)
Hi Chris and Terry, thank you for both of your replies. To be honest, I wasn’t expecting any replies which I why I’m replying quite late. I don’t use credit cards and have paid off my car loan so aside from my mortgage ($700 a month), I don’t have many expenses. Yup, I’ll definitely look into using other lenders but my main question would be if a company is worth it? I have a distant family friend whose annual income from his job is probably 150k but he owns like 10 properties in Glen Waverley (purchased a while ago). Obviously he is burrowing money through another entity. I looked into forming a trust but from what I gathered, it’s more about asset protection than increasing burrowing capacity. I have enough equity to purchase another property but the limit on my burrowing capacity is the problem. I wonder if it’s worth making a company for me based on your experiences? I did some research and it’s quite expensive upfront to establish and maintain so I’m a little wary. Any thoughts on this would be greatly appreciated :) Thanks again guys.
