Hey there,
I'm new to the site and am seeking opinions on my and my partners situation.
My partner and I are currently renting near our works in the city and we own 1 IP each.
My partners Sydney IP has an LVR of 90% and she is on 90k a year. (paying $100 per week after all expenses and tax claims)
My Adelaide IP has an LVR of 80% and I'm on 120k per year. (paying $20 per week after all expenses and tax claims)
We each have the IPs in our own names and borrowed in our own names.
We are trying to learn as much as possible and want to aim to become financially free in 10 years. Our aim is for 1 property per year. As we have no other financial commitments we can currentlly put aside $65k in a year.My queries are: What are the best strategies for borrowing? Should we pay down our loans to a certain point and then get a LOC for deposit on next purchaset? Should we set up a trust for all future next purchases?
Sorry if there is too much here but any help would be greatly appreciated.
Scott
Don't pay any of the loans down, as you won't be able to get your cash out without tax consequences.
Try to use a 100% offset account attached to one of the loans to keep your savings and receive rent etc. keep saving, and this will reduce the interest payable which will mean more savings. Try to increase incomes and rents too and then your properties will grow in the mean time. When you want to purchase the next one, ideally you should use only equity (by accessing a LOC) but using your cash may speed things up.
Trusts are good, but they will not help your borrowing capacity in anyway.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Agree with Terry buying in Trust has a lot of benefits but wont assist you in increasing your borrowing capacity.
If you need to claim the negative gearing then maybe buying in your own names is the way to go for the next deal.
Whilst your current properties are increasing in value you may have to use your own cash reserves for the forthcoming purchase to allow for equity to build up.
If you dont mind copping a bit of LMI then you can still get a 95% lvr on interest only for an IP with the LMI capped to a maximum 97% lvr. This may assist you in spreading your savings a little further.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for you help.
I'll set up an 100% offset straight away and look into getting a LOC on the Adelaide property to release some equity. This will mean that I'll have high LVRs but I think we'll have enough buffer left over for each property.Would you suggest to have an offset accoutn for each loan?
Scott
Hi Scott
No real benefit there unless you have more in the savings offset account than you do have owing on the loan account.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
OK. Thanks for your help
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