Hey All
Need advise and a lil help
Overall my goal is to achive not working again after 10 years
" maybe only part time" and just to focus on property investing as a hobbie and to manage the properties that i own and lease.I'm 28
OK situation at hand. First property i borrowed $75,000 and had $75,000 saved. I purchased a country house for $125,000 in Janurary 2007 and spent over $25,000 on the property.
Worth now over $200,000 and i have $29,000 still owing on morgage as i put in $900 a week in repayments. Place is being leased at $160 a week. My statement says my minimal weekly repayment required is $62 on morgage.
I just found my next investment place in the country which is a block of units ( 4 ) for $240k
I have no deposit and the return would be atleast $1300 a month " less fees" If i owned the, problem is i want em
Thinking about Refinancing on my first investment property for the sum amount of $240k so i can purchase them. Is this a mistake?
Will i Recieve additional fees for doing this?Or should i Just now save a for a 2nd morgage and hope something similiar comes along near Xmas.
Any feedback would be good… even with the first morgage. slow it to a minimum and focus elsewhere? Any advise
))Cheers.
Hi Rabbitoh
With that sort of speed in paying off your loan you should be able to afford a few more.
You could increase the loan on the existing one and take the deposit for the next one from here.
Have you considered just using an Interest Only loan with a 100% offset account attached? That way you can make the minimum payment with all the extra going into the offset (which saves you the same interest as if you had paid it into the loan). You can then build up the next deposit and may not need to increase the existing loan.
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
Wow $900 a week thats an excellent effort.
There are many trains of thought but as Terry mentioned you never know when you may purchase your own Principal place of residence and need the surplus funds to pay down a non tax deductible debt.
My suggestion would be to get your mortgage broker to switch your current loan to interest only and link it to an offset account whilst you have no non tax deductible debt.
Increase the borrowing on your existing investment property to a level of 80% from which you can draw out deposits for future properties and acqusition costs along the way.
Take out a standalone 80% interest only loan on the 4 units. Onm this basis you would only need to raise from your current property 20% of 240K plus sufficient to cover the acqusition costs say $15,000.
This could be drawn from a Line of Credit sitting behind your current loan.
Richard Taylor | Australia's leading private lender
A interest only loan.
I think i need to do my homework as I was more focused on a traditional method of paying the property half off or moreso then moving on. I would consider interest only loans if i was in a area which maybe booming soon to consider a quick sale but these properties are for long term leasing and i dont see how interest only would be a good idea. or am i missing something?
thanks again.
Raising interest only debt on an investment property allows the following:
*Higher cashflow for further investments
*Higher tax deductability
*Ability to pay down the non-deductable debt on your PPOR (that Richard suggests to raise to 80% LVR)Regards,
Troy
Rabbitohs, I take on board your conservative stance and have calculated the loan as P+I. (just check my numbers here)
Additional loan – $240k+6% (ie 106% of cost) = $254.4k @ say 8.5% P+I = monthly repayment of $2,050 pcm (approx).
Existing loan – refinance or take repayments down to the minimum/a figure you would be comfortable with repaying.Annual rent – $15600 + $8000 = $23000 vs IO loan $22,865 approx (+ rates, taxes, mgmnt fees, ins etc)
As your additional repayments for the new loan, on 106% borrowed funds, combined with your existing minimum repayment are less than what you are well able to repay, I'd seriously consider purchasing and (if loans were on an IO basis with an offset then the investments would only require minimal payment from your pocket).
Do it.
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