Hi
I am new to this forum so please be gentle.
I am wondering if anyone could provide me with some advise. We are wanting to buy our first investment property and not really sure which is the best way to go with the loan.
Our own home loan stands at $30,000 with our property valued between 350-370K. Our combined income is $78000. We would like to buy an IP worth 200-220K. My question is should we continue to pay as much as possible on our own home loan, or should we put most of our income into the IP? We thought that whilst paying as much off our own loan was to fix the IP for a couple of years on interest only, and then start and P/I loan.
Any ideas?You are on the right track.
Some fine tuning of your idea might be to draw a 20% deposit and costs from your home loan using a split to clearly identify which part of the loan is for which property.
Use this to get an 80% IP loan IO.
Pay IO on the IP loan until you have no PPOR loan left and indeed no nondeductible borrowings left.
Does this make sense?
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.
Hi Whatson,
In addition to Simon’s comments it may be worthwhile considering attaching a 100% offset account linked to your home debt.
This will also help pay down the loan a little quicker than it would if a ‘savings’ account wasn’t linked.
For a left field idea (and depending upon your goals beyond this property) how much of a reduction would you achieve if you converted your home loan to I/O? It may be beneficial to use the surplus payments to hold other investments.
Obviously this would need to be consistent with your goals and financial plans. Just a varied thought.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi and welcome to the forum. Fear not we don’t bite.
To add to the previous 2 constructive posts bear in mind that with only a $30000 PPOR loan you negotiation on a rate of interest will be limted.
Lenders offer discounts off higher loan balances however so you might like to consider a “No frills type rate” or a honeymoon rate linked to an offset account to at least get some interest rate benefit.
I would then look at combining this with a Professional Plan where you would certainly obtain an attractive rate of inetrest for the interest only IP.
Whatever you decide get rid of that PPOR of debt first. Flexibility and structure in your IP purchases is paramount.
Cheers Richard
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
hi whatson
Get this checked and it not advice.
do as all above has said except for the pay off the the ppor.
buy a company and a trust
go to your lender set up a split loan draw out as nmuch of the equity in cash as possible low doc or no doc ( I hate these types of loans but for this project is ideal)
lend the money to the trust
Then go shopping for a positive property for half the value of your cash ( reduce any price by 5% for cash as you have cash)
Then go to the highest growth area you can find
and by a property there neg geared.
add the neg rental + the excess from the posi and this prop should be neutral ( i’ve you work it correctly)
go back to the lender and know take two loans as above interest only.
you can keep doing this.
I have 1.4mil on my ppor and I personally owe 0 of it it is at all times lent to my trusts.
answer
ppor is the same with in 6 months
you are sat on 2 investment properties and they are neutral geared.
an you have received this for free.
if you don’t understand a broker will explain and there are a couple above.here to help
Thanks for the great tips guys.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
