Hi everyone,
My wife and I have just bought a 2 bedroom unit as our first ppor. We have no other investments. It cost 235k, we have about 80k in savings. We are thinking of doing 20% deposit and have a loan of 185. Should be make our loan smaller? we we could easily make it 175. Also my wife would like to keep about 10k in savings, for expenses that might come up(also just her peace of mind). Is there a better place to keep this than just her/my normal bank account?
Thanks in advance
ZacHi Zac,
The 20% deposit will work well, as 80% is the maximum you can borrow without having to pay LMI.
Make sure you get a loan that has an offset account attached and keep the additional funds there (This effectively works the same as paying the money off the loan, except it is easier to access and more convenient).
If you have any personal debts (which are non-tax deductible), then borrow the full 80% and pay any additional funds (except for the buffer you want) off the non-tax deductible loan.
Regards,
YI.We have no other debts of any kind
I certainly wouldnt be putting down 20% deposit on an IP when you have a PPOR loan.
You would use the 80K savings to pay down the PPOR debt and then take out a LOC or interest only loan secured against the PPOR for the same amount.
Then use these funds as deposit for the IP and take out a separate standalone loan for the balance.
This way the interest on the whole loan becomes Tax deductible.
Richard Taylor | Australia's leading private lender
Qlds, thanks for the advice, although you have misread my post, it is good to know for when we do eventually get an ip. So, hypothetically in a few years we get an ip. We should get an interest only loan using our ppor, would the interest only loan be for the whole amount or for the deposit?
Zac
Sorry indeed i did misread the post.
No take the new PPOR loan as a 80% interest only and place the balance of your funds into an offset account.
You might even be tempted to go to 85%.
Richard Taylor | Australia's leading private lender
Thanks qlds, I will talk to the broker tomorrow about getting an interest only loan with an offset account. Will this affect my fhog? (I sent through the paperwork on Friday).
Will have no bearing on the FHOG application whatsover.
Richard Taylor | Australia's leading private lender
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