Hi,
I currently have a 2 units in the heart of caloundra. Both have increased significantly in the past 12 months (1st unit $100K, 2nd unit $60K). They currently return 6%+ GPA. I recently purchased a duplex in Currimundi which has also increased by $60K. I currently have a mortgage of 150K on my current house.
Q. Am i better to pull some of the equity out of my existing properties to reduce my current mortgage ?
Many thanks[
]In a word, no
it will make no difference as the interest on the equity you will pull out will not be deductible. As the purpose is to reduce private debt.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I guess a good idea would be to reduce one’s personal mortgage to nil (as it isn’t tax deductable) and thence borrow on your own house
to invest elsewhere (the interest rate in that case being tax deductable).It may be a good idea as well to set up a line (or lines) of credit (or to have an ofset account) in order to have access to cash for emergency situations.
Pisces133
Not sure if you’ve entertained this Idea. Or you may already be doing it.
Reducing your mortgage Principal is always a good idea and a method of saving you money in the long run. But the extra cashflow could always be used to re-invest.
Like in the book and the idea I like best is the split 3ways as steve says in the book. Part to existing mortgages part to saving for future property and lastly to savings for emergencices so to speak.
Cheers
Teylu
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