Hi there,
I am new to this forum but have been actively reading the forums over the last few weeks with interest. There seem to be a raft of knowledgeable posters within the community. What I am after is, I guess, maybe some advice as to whether we (wife and I) would have enough equity to utilise to purchase other investments. Our situation is probably not common but maybe others might be in a similar situationAssets
Unit in Stanmore approx value $400K – recently moved out of and now leasing (lived in unit for 5 years)
House on Central Coast/ Lake Mac area – approx. value $350K – owned between mother and I (wife and I to use as retirement fund)
CAB $30KLiabilities
Loan Stanmore $280K
Loan Central coast $150K
Visa etc $3300approx. equity $347K – however don't want to use equity in central coast property as this is owned jointly with mother – not too sure if she would be happy about it as we have already used equity previously to purchase Stanmore unit.
Not really sure what advice I am actually after but am looking at further investing – maybe units in other capital cities offering good yield (6%) with reasonable capital growth. Anyway any advice would be welcome.
cheers
SuperhoopsHi Super
Your unit is worth $400,000. 80% of this is what you could generally borrow without LMI = $320,000. less your current loan of $280,000 = accessible equity of $40,000.
You could then use that as a deposit and costs on another property – subject to serviceability etc.
It may also be possible to just borrow 100% of the value of the new IP too, without using your equity.
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
Hello superhoop
My advice would be to put your head down and first get rid of the $3300 Visa etc. debt.
High interest, non tax deductible debt is a waste of your money and getting rid of it quickly should help you aquire some good money management habits.Cheers
ElkaThanks for your advice. Sorry Elka, I should have mentioned that I pay off our credit cards each month so no interest is accrued on these. This $3300 also includes buyers edge interest free period at the moment which will run out by June – by then it will be paid off.
Terry would you suggest using the $40K equity plus $20K (of the $30K) in the bank to use as a deposit for another property or would we be better off paying some of the loan on the Stanmore property off further – this is currently an off-set account which holds the $30K.
I was maybe looking at purchasing a unit in a capital city (close to the city) for around $250K (a house would be better but can't see much being available in this price range) using the equity and our $20K as a deposit – more than the $50K required for a 20% deposit. This would leave a loan of around $190 to $200K plus stamp duty etc thus repayments around $360 per week at current rates. I would assume rent could be around the $220 to $250 mark per week thus leaving a shortfall of around $150 per week – which we could manage. However my issue would then be the capital growth in the property – would there be much in a unit say in Adelaide or Hobart – I wouldn't think so. I could be wrong. Therefore it would be better off being a house on some land even if it was just a tad further out in the burbs (again will need to do research to see what is available).
Again thanks for the advice – any more is more than welcome. It is interesting and fun discussing these topics.
cheers
Superhoops.Hi Super
Whether to use the cash or pay down the loan would depend on your long term plans. either way will result in the same deductions now, but if you are intending to move back into the Stanmore place, then paying it down would be the go as this loan would be non-deductible when you would move in again.
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
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