G'Day,
I'm new to this site and since discovering it last week, can't get enough of it. It's brilliant, not only for practical knowledge, but for motivation too. Thanks to everyone who is willing to pass on their knowledge. Maybe I'll be able to do the same at some stage.
I was going to ask if anyone knows of a good financial planner in the Melbourne area, but I thought I'd let you know my scenario and see what suggestions you have for me.I own an IP in Blackburn south which is worth 500kish (250k mortgage) and are looking at buying another to live in (hopefully around North Melbourne – Kensington – 550k). The 250k owing is on a LOC and I'm not sure how to set up the new finance for the new property.
A mortgage broker suggested increasing the IP loan to as high as possible at a fixed interest only rate to maximise taxable debt and keep the new residential loan as low as possible, but I don't believe you can increase the IP loan and claim on the higher amount.I thought about simply going to my current lender (Adelaide bank) and applying for a standard mortgage (half fixed) with an offset account. Does this sound reasonable?
Right now, my priority is purchasing the new place to live in, however I'm also about to invest about 6k into a business I'm starting which will require a further 40k in 6 – 12 moths time. Because of this, I'll need the flexibility to get some money out of one of the properties at that time.
Oh, and if anyone does know of a good financial planner, I'd appreciate it.
Thanks you in advance for any ideas or advise.
Shaun
Im assuming your in Melbourne? If so try Chris Brown from Financial Design for Life for your financial planning. And if you want some further help with finance try Chelsea Bouma from Momentum Homeloans on 0438042058, her service is fantastic. Maybe checkout the claimable intrest thing with your account. Cheers
Hi Shaun
Firstly welcome to the site and i hope you enjoy your time here.
I have to be honest if any Mortgage Broker tells you to increase your investment loan to as much as possible and use the funds to buy your residential home then i would run a mile and change Brokers immediately as the ATO will have you on toast.
There are a couple of strategies we use for our clients in the same position however these are very client specific and not for everyone. I would need a bit more personal detail before any recommendations.
On a separate note i think you can do a lot better than have a LOC on your investment loan especially when at the moment you have no other debt (I am keeping my fingers crossed you have not used this as a transactional account and had your income or rent paid into this account and then redrawn it out for personal expenditure)
If you want to email me some details I would be happy to assist further.
Richard Taylor | Australia's leading private lender
Thanks for the comments Guys, I'm new to this and by the sound of things, I was wright to question my last mortgage brokers advise. Richard, I'm afraid that's exactly how my current LOC is set up. Is this bad simply because of the need to keep the property and living expenses seperate? If this is the case, my accountant keeps track of what spending is property related and what isn't claiming only against the property. Until now, I've thought it to be a good set up as it's given great flexibility and I've managed to reduce the amount outstanding by a considerable amount.
If there's more to it however, or simply a better way to do it, I'm keen to learn about it. What info do you need to comment further?Many thanks,
Shaun.Hi Shaun
Grrrrr i think a LOC used for investment purposes where you redraw for personal use is a terrible way to set up your account and I am sure your Accountant is merely being polite if he tells you he is ok with it. Establish it differently and i think you will save a considerable amount in Accountancy Fees as well as interest. We can cover that later.
Ok couple I things one would require:
1) When did you purchase the current IP and how much did you pay. Approx age of the property.
2) What is the approx price of the new PPOR.
3) Can you give me some income details for you and the current IP (See why i suggested you email this tome as i dont think it should be for a public forum).
4) Do you currently claim the Depreciation and Building Write Off in your salary or year end ?
This should at least get us moving in the right direction.
Richard Taylor | Australia's leading private lender
I agree with Richard – your broker is giving negligent tax advise. The ATO looks at the purpose of the funds to determine deductibility. If you increase one loan in order to get a deposit for a new home, the purpose of the increase is private.
Not many financial planners are interested in property – but Richard is a qualified FP who is interested and knows his stuff.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Richard,
I'll email you some info tonight, or tomorrow night if I run out of time.
Cheers,
Shaun… !!! mortgage brokers, hum… try this bloke… John Ryan (accountant & mortgage manager) Waverley 0416 270196 …
A Mortgage Broker and a Mortgage Manager are 2 very different beasts.
Also an Accountant cannot give Financial Advice unless this advice is very restrictive.
Richard Taylor | Australia's leading private lender
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