a quick sum up…
Im 18 and have just about put enough money (15-20k) away between me and my girlfriend to buy an investment property in Melbourne (180-230k). As we still live with our parents, this is an excellent buy opportunity, no bills wotsoever, and if you dont start young, you'll be living 40k out of the city, and really, the majority doesn't want that in Melbourne! As im currently studying Banking and Finance, i love the stock market for short term boost, then plan to have property in the long term.
just wondering if if banks will 100% want to see saving records, or where the money has come from, like transactions and etc…
or just the deposit is enough…
also can someone clarify the idea of "a low deductible loan with a high non-deductible loan. Keeping things IO with an offset will save the same interest, but gives more flexibility to save tax"
was posted on another thread, would really like to know more..
Hi and welcome to the forum.
Firstly congratulations on wanting to start your investing career so early and I take my hat off to you.
Unfortunately the days of the 100% loan whilst not yet been and gone have requirements that are fairly stringent in respect of credit and asset requirements.
There are only a couple of lenders left offering such a product and all require evidence of a 20% equity stake in other property or cash assets.
So on the basis the maximum loan you can obtain would be 95% + LMI you would need to come up with 5% deposit plus your acquisition costs.
Given this will be close to the amount you have saved why not think about buying for all intense and purposes the property as a PPOR obtaining both the concessionary Stamp Duty and the $17K FHOG in Vic.
As long as the services are all in your name and the you nominate the property as your PPOR for 6 months in the first 12 months after settlement you will have satisfied the FHOG requirements. You spend 6 months renovating the property although you would not have been able to obtain a rental income in that time.
Work out what 6 months rent would be and I bet it is considerably less than $17K.
After 6 months the property could be rented out and you then have the 6 year applied in respect of any CGT.
You could look to take out a 95-100% loan (which will be available being your PPOR) and take this on an interest only basis with 100% offset account attached to to protect the future deductability of the loan.
Obviously without more individual information it is difficult to provide you with a clearer answer.
Drop us a line if you need any additional information.
Richard Taylor | Australia's leading private lender
thanks heaps for the reply, but
1. whats the difference between putting your savings into the principle or paying IO and saving the rest of our money in an offset account?
also
2. will they want to see records of savings, or just the amount we have to deposit?
so let say our 20k plus 17k = 37k?
cheers
Hi
1) You usualy have a limit on how much principle you can pay off anually with an interest only loan, however it depends on whether
you are renting it out or living in it which makes it viable or not. Having offsett account means more liquidity, much prefered however different for every one.2)In my short experience the LMI is higher if you can not provide a savings history as it becomes an unsecured deposit so if you have three months of savings records great!
I agree try to maximise the FHOG however im trying to find out at the moment FHOG means living in for sixmonths, the stamp duty concession means living in for 12 months……still researching… renovation while living in is like taking two stabs at the pie so definantly try to buy some thing at a discount to implement this good strategy. exactly what im try to do now….
Good Luck
Matt???
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