My husband and I are keen to invest in property, but unsure the best way to start out.
We currently live in our home owing $215k and the house is worth around $270k. We have enough savings in redraw to put a deposit on a house in regional Vic (one hour from our current home) worth around $100k.
Our thought was that we could rent out our current home (we would need to kick in around $150 per month to meet the mortgage repayments) and live in the new house where our mortgage would be small at around $600-$700pm. However, we would only be willing to live in the other house for a maximum of 4 years until our son starts school.We only have one income of $70k and a young baby.
The basic maths tells us we would be better off financially on a week to week basis if we were able to do this, but are there any issues I am missing, and are we likely to get finance seeing we don't have a lot of equity in our house? Our only other debt is a credit card with a $4500 limit, we own both of our cars.
Megan
Hi Megan
Just to let you now the interest on the redraw from your current loan will not be Tax deductible as the funds will not be used for investment so you might have to rething your figures as you will be paying for this not the Tax man / tenant.
Richard Taylor | Australia's leading private lender
Regarding the equity redraw issue you could consider doing the following: Sell your current house to your partner via a "love and affection transfer" (no stamp duty), refinance in the process and then you can use these new funds to buy another PPOR and negative gear the current house your in once you rent it out.
Speak to an accountant / solicitor though…
Ben
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