Hi
Hope someone can assist me with this one. I am in a bit of a frazzle because I don;t know what to do.Have just signed a contract to purchase a property $375k. I can borrow 80% or I can pay borrow 40% and put up the cash myself. I want to live in the house for 12 months, renovate, and then either sell it or turn it into an IP.
At the moment I think that I would sell it 12 or 18 months from now rather than use it as an IP, seeing as I will be renovating.
But whats the best thing to do in terms of borrowing. Borrow 80% or 40%. The interest on the loan is what is scaring the dickens out of me.
Please someone with the know how, give me your advice.
many thanks
Jules[blush2]JULES1
Email MeThe less you borrow the easier it will be to qualify and you will also save a bit on stamp duty on the mortgage (except in Vic where this has been abolished?). You will also save interest.
If need be you could probably increase your loan to 80% later, but this may have tax consequences.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry
I have an appointment with the bank this week and needed some advice before fronting themJules
JULES1
Email MeHi Jules,
As Terry said borrowing 40% will make it easier to secure finance.
Given the uncertainty of your plans post, 12 months, I ownder if you wouldn’t be better off using the 40$ difference between an 80% and 40% and placing these funds in an offset account (note I assume you have this in cash).
This will enable you to reduce your interest bill by this amount while still being able to use the funds at the end of 12 months if your plans change.
At the same time this cash is readily accessible if your world goes pear shaped.
Using this approach will also enable you to maintin full deductibility of the 80% – if this is in fact consistent with your plans.
Hope this helps.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
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