We currently owe 120k on our PPOR worth 300k. We will be in receipt of approx 100k around April or perhaps a bit later. (What a problem huh! This is due to the sale of a property with another party.)
From what I can gather many people seem to be selling or sitting, however we want to know some way to move forward positively. We’re keen to move rather than wait and are open to all suggestions.
We are also contemplating selling our PPOR and renting to get the ball moving even quicker.Or are we better off in the short/long term to use available equity only from our PPOR. (Steve suggests no more than 40%)Or should we just leave it alone altogether.
We are completely open to +ve cashflow properties throughout Australia, subject to due dilligence of course. And not opposed at all to investing in New Zealand (Thanks for your influence in that direction Westan).
Due to our business situation, my husband is able to continue to bring in an income while I am now freed up considerably to spend time on creating a more work-free situation for us both for later.
I have spent many days over the last 3 weeks or so just reading through info I’ve found in the forums and am so appreciative of the things people are willing to share.(The acronyms are a bit of a challenge at first but I think I have a handle on most of them now. I’ve made up some interesting ones of my own that I use when confusion sets in.)
Anyone’s thoughts on our situation would be great. Please ask for more details if it helps.
Cheers
BronIf I planned to keep the PPOR for some time I would consider paying down the home loan and then redrawing from that for 20% deposits for IPs. This means your debt will be more tax effective.
Why sell a property to buy more? You will only incur unnecessary selling costs!
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.
Thanks for your reply Simon,
Our line of thinking was that we could utilise the 280k to finance more IP’s inaddition to the 100k, thereby accelerating the whole process.Rather than just using the 40% equity ie 120k.
Cheers
BronAlso Simon, our PPOR is a nice place to live for now but not our “Dream Home”. I also don’t really know if it would be very rentable. Nice house but steep block.
Bron
Hi Bron and Steve
As Simon has mentioned you can utilize your PPOR much more efficently. As it is your PPOR depending on Steves income you could invetigate into a line of credit on the equity up to 90% of its value $270k-120K leaves you with 150K to use on the purchase of your positive geared properties. Each property could be set up in a sub account which would aid at tax time. Contact your adviser on structuring this as there are other factors which may influence your descions.
best of luck.Warren Pickles
Finance specialist
Australian capital Securities
0408 811 660Hi Warren,
Thanks for your reply.
Before we go too far there’s a couple of things I need to clarify…..
Firstly, the “Steve” I am referring to is Steve McKnight!! His advice is not to use more than 40% equity in your PPOR.
Secondly, there is a typo in one of my posts (and some dodgy maths as I was racing out the door yesterday)
Sorry for the confusion. But to cut to the chase…
We would have a total of 280k cash with no debt if we sold our PPOR. If we kept our PPOR, 100k cash and 72k available in equity (Going by Steve McKnight’s 40% suggestion) and a debt of 120k. So a difference of 108k or so.
I guess my question is – Surely it’s worth selling to access the extra 108k?
Do any of the more long term investors here use 90% equity in their PPOR? Is this common?
Thanks
Bron
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