Does anyone benefit greatly from renting their home to live in whilst having investment properties. Im wondering if this is something we could consider to increase our borrowing capacity? or will it only work if the home you rent is cheaper than mortgage repayments of living in ppor. At the moment our highest separate homeloan is on the ppor.
Im wondering whether banks favour tax deductible debt over personal debt when going for more investment loans. Hope that makes sense to someone out there!
Would love to hear about experiences from investors who use this strategy.
Hybrid
From a serviceability perspective certainly you will be able to borrow more with some lenders if your purchase an IP with deductible debt over a PPOR with non deductible debt as they add back the negative gearing claim to your net taxable income.
In saying this remember that if you are paying rent this will be treated as a liability and will reduce the amount you can borrow.
Moral of the post is give all of the information to your mortgage broker and let him play with the numbers for you as the amount you can borrow from 1 lender to another variables considerably.
Richard Taylor | Australia's leading private lender
An investment loan is a different animal to a residental ppor loan. A bank will take into account the rental income you will receive from having an investment property so you can afford the loan much easier than someone with a PPOR that brings in zero income and the home owner is spending a large part of their income on paying the loan off.THis is some times refered to as mortgage stress in the media where a person is paying a larger portion of their wage on laon repayments.
When you ask does anyone benefit from renting as opposed to owning the house it is really a matter of time that makes a big difference. In the long term owning the house pays off as you eventually own it where as if you rent it long term you own nothing.
In the short term rent is usually cheaper than a mortgage payment and can release some cash however rents do go up over time and interest rates on mortgages change also. Also if you pay the rent you do not pay for the maintenance / repairs , council rates, building insurance, water rates part of water bill, ect if it is residential property.
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