Hello,
How about this for an idea?
I have a significant interest in my own home, being worth about $400,000.
I still have an $80,000 mortgage, and with 3 children, find it difficult to save.
I am wondering if selling my home to an investor might be a good idea. Then I could lease back with an option to buy some time down the track. By doing this, I could access my funds as cash in order to finance deposits on other property.
An alternative might be to cut back to the minimum payment the bank requires and save the rest for deposits.
Any thoughts on these ideas?
Cheers,
Jonathan.
Yes, this is a viable option. Commonly called Sell To Rent or STRing. I’m in the process of doing just this very thing.
F.[cowboy2]
Hi,
If your object is to increase your income by buying cash flow positive investments or even trade properties, I don’t see the point of either strategy mentioned.
If you sell your property to an investor and rent back, you will incurr selling costs and your rent will be greater than the minimum commitment on a $80,000 mortgage. The only thing you gain is cash for a deposit. You will be able to borrow that same cash against your existing equity if you wish!Philip Limbert
APM Finance Pty Ltd
[email protected]Originally posted by Jonathan.Holmes:I have a significant interest in my own home, being worth about $400,000.
I still have an $80,000 mortgage, and with 3 children, find it difficult to save.
I am wondering if selling my home to an investor might be a good idea. Then I could lease back with an option to buy some time down the track. By doing this, I could access my funds as cash in order to finance deposits on other property.
An alternative might be to cut back to the minimum payment the bank requires and save the rest for deposits.
Any thoughts on these ideas?
Cheers,
Jonathan.
Hi Jonathon,
Like Phillip I believe you will be far better off in the long term by releasing the equity you have in your existing home rather than entertaining the possibility of selling and renting.
Saving cash for a deposit is no longer a prerequisite to the purchase of assets. If you have suitable equity (you do) then you can release this for investments.
Using the figures provided $400K property with mortgage of $80K.
As it stands lenders will recognise 80% (you can go higher but that is another story) of the value of your property (in your case $320K) then reduce this figure by any oustanding mortgages (in your case $80K) leaving you with the difference (in your case $240K) being equity available to fund other investments.
This $240K will allow you to borrow plenty.
Derek
[email protected]
The Investors Club http://www.monopoly.tic.com.au
0409 882 958
Skype – derekjones2113Yes, not a good idea. Too many costs, just look at accessing the equity and use that for further investments. Look at getting a IO loan on both the investment portion and your non deductible portions – with a 100% offset account on this.
Terryw
Discover Home Loans
Parramatta
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you could get a portfolio loan instead of mortage on ppor home. This releases some of your $320,000 in equity and you cna then seperate loan for example $80,000 mortage plus say $40,000 on portfolio loan for deposit on investment loan. This is sometimes called a line of credit however you need to make sure $40,000 is used for deposit rather than for personal items.
This is general advise and not financial advise. I am not aware of your personal circumstances .
I have added this facility to one of my investment loans. For either a deposit or to buy shares I haven’t decided yet.
[suave3]hmm even at $0 in savings that gives you a LVR of 20%
Just a thought- You could look at refinancing and take out $150k which could effectively give you control of $180k worth of shares and a $300k IP?
You could also look at some of the Income Producing Share Funds with the money you get from refinancing?
Not saying that you should do either, just expressing some options and thoughts.
The above is my opinion only; Please do your due dilligence…….after all; I am still learning !
RedWing
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