Hi,
As you will see from my last couple of posts i am very confused about the next investment step to take.
i am currently living in my newly purchased apartment which i owe 295 and is worth 370. We are in Sydney and would like to live somewhere a bit bigger. i have looked into buying a bigger place to live and renting out the current place but the costs of the new property would be so high and the tax benefits nil as it would be my PPOR. i think i will probably move back to newcastle in 5 or so years to start a family and be near my family and would therefore possibly have to sell the larger place anyway.i have a decent deposit saved and i really don't know whether to stay where i am and buy an IP in newcastle with a view to the future or buy a bigger place here and hope the capital growth may give me enough funds to buy the next place in a few years. I have even thought buying another IP and renting to save a deposit and maximise the tax benefits.
Also, who is the best person to get this type of professional advise from…an accountant or a financial planner?
I am so confused and am driving my Dad crazy with the constant questions…….can anyone offer any advice.
I appreciate your patience and an info that is offered
If you want to buy a new PPOR and keep the current one as an IP then you need to stop paying down the Principal. Get an offset and save in there. If you keep paying down the current apartment then when you buy your next home you will have a 100% loan against the new place which is nondeductible and all your equity in an IP with a small deductible debt.
Using the offset is just as effective interestwise whilst living in the apartment but you can use the savings to buy the new home.
This is vital that you understand this. Please ask for more info if you need further explanations.
Cheers,
Thanks Simon,
My current PPOR does have an offset facility and this is where is where i have been saving my deposit for whatever i decide to do. The loan is IO and is fixed for 3 years at a good rate. In looking at a new bigger place i calculated that the stamp duty would be around 25k and that i would also need approx 5% deposit (30k) to access an offset facility (this would also lead to approx 15k LMI being payable). Should i be able to get a top-up loan from the bank to cover the start-up costs on the new PPOR (i would need about 20k after my deposit is factored in) based in the equity in the current one and what would be the terms of this loan
i am just concerned that if i buy a decent property in the inner-wets suburbs as a PPOR, that the costs of living an servicing the property, the zero tax benefits and possible high exit cost when i decided to move may negate any capital growth and prevent me saving anything in the mean time.
i am wondering if i should just stay where i am, buy a new IP and hold for a few years and then sell one of them to cover the costs when i finally decide to move back to newcastle. Or i could buy a nice place in newcastle now and rent it until we are ready to move back. I now realise there are CGT issues and i am trying to pick the best stratergy to minimise this effect.
I am really confused and want to just make a decision soon and stick to it.
I really appreciate your help
Hi
From a purely capital growth perspective I think Newcastle is looking pretty good over the next 5 years or so for the following reasons:
1. Major hub for coal exports.
2. Newcastle is changing – its becoming a lot "cooler". Govt has done a good job in the city close to water.
3. F3 is being upgraded making transport access to Sydney easier. Also F3 will eventually link to M2.Also, you can probably buy an investment house in Newcastle at a reasonable price which would be better than buying a unit in Sydney.
Of course if you can afford a house in the Inner West area of Sydney that will do very well over the next 5 years as well.
Hope this helps.
TheBish
Hello zizzuu
Do I understand your post correctly. You have a fixed IO loan for 3 years with a 100% offset account and at a good rate?
Can you tell me who with please?Thank you
ElkaHi Elka
A couple of lenders offer the product but it would not have been taken out in the last week or 2.
Adelaide Bank are one that offer 100% offset on their fixed rate products but there are a couple of others including fixed rates on line of credit products which can be useful for investment when you dont want to X collateralise.Richard Taylor | Australia's leading private lender
Hi Elka,
It is with Adelaide Bank and i settled the loan in July this year. Now that i know "alot" more about finance i was lucky with the loan i selected (IO with an offset). It has worked well for me so far
Thankyou for all your help everyone
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