Hi,Steve & Sharon here.We like many others have read Steves book and subsequently “logged on”.We have read the forum for just a short while and thought we would like to ask for some advice of our own.We have a portfolio or line of credit loan with a $130,000 mortgage.We havent had our home valued for some time and we believe it would be in the vicinity of approx $330,000 to $360,000 (bank value).We have 3 kids (9,7,5)and those obvious expenses.Is it a better choice to use equity or another approach?We also plan to get a bank valuation on our home.Can we borrow only up to a certain percentage if we use equity?Apologies for the long winded approach and many thanx.
One of my preferred strategies is to draw a 20% deposit plus costs from your home. Split it off from your home loan so it is shown seperate on the statement.
We then borrow 80% against the new property with the same bank or a different one.
Unless you need the flexibility I am not so keen on the LOC. It costs more and is sometimes too available – like a credit card in the wrong hands[
]You need to check with your broker or mortgage advisor if this strategy suits you.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Steve & Sharon…Hi
To explain my suggestions I’ll use approx. figures
If it was my scenario I would do the folowimg…
Your home at …$350,000 …Refinance with a two in one type loan to a total of 80% = $280,000.
The $280k is split in two…$130k P&I loan …and
$150k Line of Credit for Investment, but NOT at the moment. I would get the loan in place now as the LOC won’t cost you anything to have it in place. You of course will have access to it when required. In the meantime focus on reducing the P&I “home loan” as no tax advantages here.If you are to target properties at $150-$200,000
You are in a position to Invest in 3 IP’s certainly 2IP’s. Say IP at $173,000 ..Dep req. 20%
plus costs about $12,000 Total req. = $$47,000You draw the $47,000 from your LOC. You could do it three times. Ensure that each IP is a
“Stand Alone” deal for conveniance in refinancing down the track..also easier should you sell one day. Don’t let the lender take other property as security…they will, if you let them.Initially, I would have the 80% loans at Interest Only until such time your $130,000 P&I is paid out.
Why do I say get ready..but not now….the current R/E Mkt reminds me of Oct’87 in the Stock Mkt. I am confident that you will buy todays IP at 20% better,1n 12-18 months……
Just my two bobs worth.
Wishing you both well.
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Thank you Mortgage Hunter for your reply.We will have a better idea of our equity when we get a valuation from our bank.How would you suggest we look at minimising tax? Would trusts etc be benificial? We both work part time to 1.Allow for child care 2.reduce tax. Thanx again
Thanx Billfromoz.We will start with getting a bank valuation to get a realistic equity figure then look at our mortgage reduction.We welcome any other ideas at this time. Many thanx.
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