Hi all.
My wife and I are paying off a place we bought 3 years back for $385,000. We owe $204,000. I reckon our place would be worth at least $400K now.
Should we pay more off our place, or could we get started in property ? We dont have savings as such, due to line of credit loan. Is using equity our only option.PLEASE dont suggest negative gearing….
pabbs [biggrin]
pabbs73,
It would appear you have some 116k in equity and it appears you already realise the potential of that.
I do not see much point in paying down your property so you can increase your equity just to then go and borrow on it to buy property.
Why not buy a property for say 120k and use 24k of existing equity and a new loan for 96k w/- offset for the new property. The extra income will pay both properties down depending on how you transfer your income/banking as it comes in.(All assuming you buy the right proprty)
Country wise , there is still places around for 120k with rents of 240/week plus.
As for another alternative, then I do not know !!!
Cheers LenI would suggest (very respectfully) to ditch the line of credit. We changed our LOC to a normal housing loan with redraw over a year ago and our housing loan is decreasing nicely.
We still can redraw if needed, but it is much easier to be disciplined when we have a monthly repayment and we only redraw when we absolutely have to (rarely). It has made such a difference. LOC was too easy to abuse for us.
Having said that we are extremely disciplined with our (much larger) investment loan and we pay the credit card off in full each month.
It was just the LOC, which was not very big but we just kept drawing it up.
If you can buy a positive cashflow, I’d look for a great deal and do it.
Regards, Wylie
IMHO you are very ready to invest right now. However you may need to think more carefully about your investing criteria. As Peter Spann says “Good Cash flow, good Capital growth, low risk. Choose two.” It seems you’ve used one of your 2 choices on good cash flow, so that leaves either low risk/low growth or riskier/good growth.
Think carefully before ruling out NG property. Why not a combinaton of NG property for low risk and good growth, and some high yielding shares or funds for good cash flow and low risk to support the NG property. You have enough equity to do this.
Originally posted by Wylie:I would suggest (very respectfully) to ditch the line of credit. We changed our LOC to a normal housing loan with redraw over a year ago and our housing loan is decreasing nicely.
We still can redraw if needed, but it is much easier to be disciplined when we have a monthly repayment and we only redraw when we absolutely have to (rarely). It has made such a difference. LOC was too easy to abuse for us.
Having said that we are extremely disciplined with our (much larger) investment loan and we pay the credit card off in full each month.
It was just the LOC, which was not very big but we just kept drawing it up.
If you can buy a positive cashflow, I’d look for a great deal and do it.
Regards, Wylie
I agree to ditch the LOC but I would not recommend redraw ordinarily. I much prefer to see people getting ahead in an offset account.
There is plenty of info as to why posted.
Cheers,
Simon Macks
Residential and Commercial Finance 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.
Hi again, forgot to mention with our housing loan with redraw that our every day account (Westpac) is our offset account. All funds in that account are fully offset, so we actually make good use of this as well.
Regards, Wylie
WE are in a similar position. THe only option for us as we only have one income is to rent out our current house and move into the new purchase – as we have no cash either and the rent assists with all the lending capacity etc.
Fantastic…Thanks all for the advice. We had a close call about 2 years back with a neg geared property in QLD. Since getting onto this forum, our confidence in property is building.
We still need to learn more and gather info before we proceed.
If the market is slowing (as suggested), should we hold back for awhile ??
Pabbs
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