how much can i borrow?

I’m sure Richard will sort you out on the details, but my 2c worth –

A good starting point would be to get rid of the two cars worth(?) $60k if you can – are there existing loans on them? Cars are not assets – they are liabilities, or ‘doodads’. Buy one decent sec/hand one for about $10k and put any remaining cash from the sales into the loan/s.

This is money down the drain sitting in 2 very expensive and very depreciable (but not claimable) ‘doodads’ that cost a lot to maintain. Even if your company pays for them (I’m just guessing on that), you still have to find the money for the lease/h.p payments every month; it’s just another cash draining, needless expense – stopping you from buying more assets.

Unfortunately, a lot of banks view cars and furniture and clothes etc as assets which is distorting your true net worth. I don’t know why they do that. An asset puts money in your pocket, a liability takes it from your pocket.

The reality is that all that stuff is useless and will hold back your investment potential – even if the bank thinks it is o.k.

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”

If you have no other personal debt then that’s what I would be doing – putting the savings into the I.P loan to reduce debt, improve your return/cashflow/equity.

There are others who might say put the spare cash into another high yield investment; say, a mutual fund or other shares, and leave the investment loan untouched as all the interest is tax deductible. It is swings and round-abouts I think.

The only problem that I can see with the path you are choosing is you are going to be borrowing from the I.P equity to help fund a loan on a PPoR. The interest and holding costs on the PPoR will not be tax deductible. Ideally it would be better to be borrowing from your PPoR equity to fund an I.P, then the interest is tax deductible.

Or, better still; use the equity from the I.P you buy with your mum to fund another I.P in the future, and you continue to live at home or rent a place yourself. This may be financially smarter than buying and living in your own house, but not a lot of people do it as they are very emotionally attached to their PPoR, or can’t get past the idea of buying and living in their own home.

We have done it; our PPoR is another I.P for us now, and have no problem now (mentally) with renting a nice house in an area we like while pouring funds into investing.

Talk to Richard about these scenarios (he’s probably reading this post as you are!)

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”