Hi everyone, I have been reading the forums on this site and decided to join to see if I can get help in deciphering my situation in a more understandable and manageable way, other than what the banks tell me what I can and cannot do. (plus I have no family or personal friends I can lean on for advise)
Ok, my situation is this:
My home is valued at $255,000 (so I am told)
I currently owe $166,000 on this, paying approx $1000 p/month. But my problem lies with other debts consisting of P/L $23,000 @ $315 p/month and the dreaded credit card of $18,000 @ $390 p/month.
As my home loan has just come out of its fixed rate I have been thinking of consolidating all these debts together to make things more manageable.
As they only lend up to the 80%, they will only lend me approx $204,000 so I will still have a small portion of maybe the credit card left to pay, but I will be able to manage that and to pay as much extra as possible to get rid of it totally.
I am tired of living in the everyday routine of worrying about money and would like get ahead for once and have always been interested in investment properties, especially positively geared, but I’m not sure how this will work for me in the financial position I am in at the moment, plus the bank say they can only lend me so much towards another property, which obviously wont be enough to purchase anything, but then even if I could, I don’t have the cash for deposits etc.
I am interested in purchasing a unit $139,000 which is rented out to university students and has a current tenant paying $280.00 per/week.
Expenses in addition to the mortgage will be:
Strata fees: approx $500 p/qtr, rates & water $270 p/qtr, management fees of 6/6%
I am unsure if this is viable for me and if so, how do I go about it, regarding the deposit and approaching the bank.
Sorry for such a long spiel, felt like I had to get that off my chest, and am looking forward to any input. It will be greatly appreciated.
J
J,
Pay off your small debts first. Sure, roll it into your home loan if that doesn't cost too much to redraw (if necessary), but there is a danger with this, because then you will be able to bok your credit card up again. So, if you do roll everything into your homeloan, make your credit card max at $1000 so you can't make the same mistake again. Also, if you roll it all into your homeloan, you will end up having higher repayments for the rest of the loan (unless it is IO), which may then affect your ability cashflow wise to purchse the investment property even when you have your home loan back to the balance that it is now. Some others may say, sure buy the investment property, but I'm pretty conservative when it comes to taking on debt. Get yourself sorted out first. Many of us beleive that there will be better bargains to be had on the RE market yet.
SHi J
Firstly welcome to the forum and i hope you enjoy your time with us.
I hate to say the information your Bank have given you is incorrect unless there is something we are not aware of.
It is of course difficult to comment on a situation without having all of the facts but i am certain that there is room to move and from the information you have provided feel sure we could assist further than your current lender.
By all means drop me an email with some extra information and I would be happy to come back to you with some further advices.
Richard Taylor | Australia's leading private lender
Hi S.
Thanks for your input.
Yes, i will definitely be reducing the credit card limit, that is high on the agenda.
My new repayments are not far off from what I am paying now, even including consolidation of the other debts, as the interest rates are even lower that what I was on, plus spreading the other debts over the longer term (which I know is not a good thing-but essential for the time being) so I should be saving quite a few hundred dollars each month on outlay.
And like you say about getting things sorted out first. That is what i keep coming back to in my own thinking. I myself know i can do this investing thing, it just becomes so confusing and frustrating when you can't get started. So I go back to, firstly consolidate the home and debts, then can start on some kind of saving/cash flow plan to be able to finally get into the investment market.
Another option that has been suggested to me, is to rent out my existing home. (I do have somewhere i can stay at no cost), so all the outlay i have now, I will be able to save most of towards a deposit etc for something else. I begin to think this is a great option, but again get lost in thought after all the figure crunching and the need to have my own place again at some point.
Thanks again.
T.
Hi J
Firstly welcome to the forum and i hope you enjoy your time with us.
I hate to say the information your Bank have given you is incorrect unless there is something we are not aware of.
It is of course difficult to comment on a situation without having all of the facts but i am certain that there is room to move and from the information you have provided feel sure we could assist further than your current lender.
By all means drop me an email with some extra information and I would be happy to come back to you with some further advices.
Richard Taylor | Australia's leading private lender
When you consolidate you will cut up or reduce the limit on your credit card to next to nothing.
As long as you disciplined there is no reason why rolling everything into one and using the positive cash flow from the new IP to reduce your debt with the correct loan structure wont be extremely beneficial.
Richard Taylor | Australia's leading private lender
Hi Richard
Thanks for your help on this. I have sent you an email but not sure if it is going through as is showing errors on my end. Please let me know if it has gone through.
T.
Hi Dolphin Girl
Sorry no i didnt receive it. received a dozen more but nothing from you.
Richard Taylor | Australia's leading private lender
Richard
I have sent another email, please let me know if you got that one or not.
Thanks
T.No email received but i replied to your private message.
Richard Taylor | Australia's leading private lender
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