Hi All,
Been reading up on the posts in this forum and found some really useful ideas and information.
My girlfriend and I are looking to buy our PPOR shortly. We should have a deposit of $30k by this time next year. We are both professionals working full time for a combined $95k before tax pa. We currently rent for $280 just out of the CBD in Melbourne.
We would like to buy our PPOR first (conducting reno’s if required), then look to refinance about a year after that and buy our first IP.
We will be looking for the PPOR in Melbourne (within 10km of the cbd) for a price around $250k-300k. This will be our first home so we would be eligible for the FHOG.
Would this be the best way to go? Should we continue to rent and buy an IP first? Renting sucks though, and we would like to have our own place that we could ‘do up’.Any ideas would be appreciated.[goatee]
BTW, we have around 3K in credit card debt and a car loan, do banks allow you to combine the current debt into a mortgage?
Jay…
Jay,
There are a number of advantages to either method.
With your personal feelings I think you would prefer to buy a PPOR first. I think this is what I would do too.
This can be a great tax exempt investment – often PPORs do better than IP’s – I think this is because they are bought in nicer areas and maintained with more pride…but I am not knocking IPs at all here.
There are other great incentives such as the FHOG and CGT exemptions. You may even both get the FHOG depending upon the nature of your relationship.
Your first home is often not your permanent home. With that in mind you need to structure your finances accordingly. Offsets and IO are important to consider and this can be explained when you are ready.
Even if you have money in offset I would suggest borrowing against the PPOR for the IP’s to maximise tax deductibility.
I would rather not make recommendations as to rolling in other debts without knowing your situation better but it can be done – shopuld it be done is a whole different question!
I hope this helps but I suspect I have just thrown up additional questions.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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.
Originally posted by jaywol:BTW, we have around 3K in credit card debt and a car loan, do banks allow you to combine the current debt into a mortgage?
Jay…
Hi jay,
Lending institutions will allow you to consolidate debt into a current mortgage via a refinance.However in this scenario based on an initial purchase you would repay the CC and car loan debt from your savings and contribute a smaller deposit towards the purchase,
Keep in mind this will increase the LVR (loan to value ratio) and LMI (lenders mortgage insurance) will apply on finance over 80%LVR. Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Thanks Simon and Steven,
This is the type of info I need at this stage.
Thanks alot for your interest and reply.Jay..
Jaywol,
My partner (recently my fiance) where in the same position as you, this time last year. We bought our PPOR in November and we should finish some renos in the next couple of months with the hope of building enough equity to start investing in the new year.
So from the perspective of someone who has been in the same position, looking back we are both really happy having bought the PPOR and now we will look to move forward with our investing.
Good luck
RhysThanks Ryhs, it’s always good to know that others are in the same situation that you are in.
Good luck to you.
Jay..
Hi Jay,
I was in a similer situation to you a few years ago. My wife (then girlfriend) and I bought a PPOR and have been doing it up ever since (I don’t have a great amount of time or skill in terms of renovations). This has worked well for us, as I have been able to access significant additional equity since purchasing.
Regards
AlistairSimon,
In relation to being able to refinance to incorporate existing debt into your mortgage . . . Can this be done within 12 months of obtaining the mortgage, or do you have to wait until you have built up enough equity to cover the old debt???
Thanks
Sacrifice
Understanding
Committment
Character
Excellence
Satisfaction
Structure
= SUCCESSThe answer is either/both.
You do need to wait until the new total loan size is less than 80% of the properties valuation. This can increase to 95% if you are willing to pay the LMI.
I have had some success recently with refinancing property loans to a pet lender on the basis that they only get the new deal if “their inhouse valuation” comes up to the amount required. It cost the applicant nothing to apply and there was nothing to lose.
I am sure most brokers have a similar “supportive” lender they can call upon for this sort of refinance.
Cheers,
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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.
[whistle]
Thanks for that Simon – I have been trying to figure out ways around my current situatuation which sounds similar to Jays. I am saving like crazy to purchase my first property but at the same time trying to pay off $10,000 on a car loan (which is probably more than what my car is worth now [glum])
I was worried that even once I had enough for a deposit etc I may be putting too much pressure on myself paying off a mortgage as well as such a large personal debt.
Ideally I would love to be able to roll it into the mortgage – but if that isn’t an option I was looking at selling the car and getting back to the basics of public transport [rolleyesanim]
Anyway – thank you for your help – if you know of any other ways I could tackle this issue I would appreciate the feedback.
Many thanks
IITSacrifice
Understanding
Committment
Character
Excellence
Satisfaction
Structure
= SUCCESSGive a broker a call and ask him to run some figures for you. You might be able to make some decisions armed with the info he can give you.
Sometimes it is better to pay down a PL and sometimes better to keep it. Depends whether your strength is in a big deposit or a good income.
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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 Simon,
I don’t suppose you would be willing to help me crunch some numbers???
Cheers,
IITSacrifice
Understanding
Committment
Character
Excellence
Satisfaction
Structure
= SUCCESSDrop me an email mate
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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.
What about mortgages with people like Keystart http://www.housing.wa.gov.au/key/home.htm where you don’t need mortgage insureance, even if your LVR is over 80%? I assume they must apply to other states as well as WA…
Kate
Keystart is a very useful product but unfortunately as a WA Govt initiative it is unavailable outside that state.
I am not aware of anything similar elsewhere.
QLD did have one in the 80’s but when rates dropped it proved to be a disaster and really hurt the folks it was supposed to be helping.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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 the suggestion Kate – Keystart sounds like a fantastic initiative by the WA government, maybe I should consider a move[hmmm]
Sacrifice
Understanding
Committment
Character
Excellence
Satisfaction
Structure
= SUCCESS
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