Currently own a 1bd unit as our PPOR. We Originally purchased for 269K about 3 yrs ago and owe about 245k.
Real estate agent thinks we can get 340K-350K, which seems to be in line with the market.
We could rent it out for about $350/week easy as the Unit beneath rents for $390.Our plan was to live here for a few years (tick done) and then upgrade and keep this place as an Investment Property. However I don’t know if this is going to be possible, as we don’t have any savings. We really only have the equity to use.
We are looking to buy a new PPOR out in the ‘burbs as living in this unit is just too small for us now. We are looking to purchase a house at < 350K.
I would really love to keep it … How would it be possible to do both?Have spoken to the bank and they said we would need about 60K deposit, based on their valuation of 310K.
It depends on your goals, the buying a property to get into the market, allow time for growth, sell and upgrade is a strategy many have used before. It is costly however, selling agents fees, moving, stamp duty on the new property etc may cost you $30k to $50k.
Alternatively if you need to move to a larger place, consider renting for a period. It is generally cheaper to rent than to buy. You 'convert' your existing PPOR into an IP, change the loan to an IO, set up an offset, save funds into that. You continue to build your property portfolio until it is time to sell one or more and use that equity to purchase your own place outright or close to.
I suggest you do the numbers to see which makes sense for you.
Good luck
GregThanks mate
yeh will def do up some numbers.The trouble with keeping it as an IP is that you have $100,000 locked up in it. That means $100k less available for your new home which means higher non deductible interest.
I suggest you do some sums of your after tax position with selling and keeping.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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It will come down to what you want to take the refinance to (and what Lenders Mortgage Insurance you are willing to pay) and what the bank valuation comes in at.
If the valuation came in at $350K and you took it up to a 90% LVR (and paid the LMI fees), you could release $70K in equity, which is enough to cover the deposit the bank has suggested.
Just make sure you get the structuring right and don’t cross the properties!
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