hi all,
my current prime residence/home is valued at 230-240K, on that i owe right now 20k only. obv i have a redraw easily of 80-100k in there.
i am looking for buy old fibro home as first ip for 300-350k.
for this i need 70k for 20% deposit, stamp duty, legal fees etc.
the ip will give rent of about 330-350 per week.
is it a right time for me to buy a IP and say withdraw 50k from my home loan to close first ip deal.
or better to pay of this loan and then save another 30-40K before i buy the ip?????
family are very happy 2 stay in townhouuse only and dont want to live in home. so next prop is going to be an IP only….
i earn 2600 a forthnight and wifey earns 1350 a forthnight…
but wife is expecting and we will not have her income for 1 year in about 6 months time.so redraw 50K from my home loan to finalise a IP deal now or come back in 8-10 months time???
looking for some advice?
investhut
any input/direction??
If it were me, Id pay down the 20k on your PPOR then use that as security for the 20% plus settlement costs.
Take out a second investment loan with the IP as security for the remaining 80%.
If you do buy the IP now, pay down all non deductible debt first.
Structuring the loan correctly is parmount to an investor and to be honest utilising the redraw on your PPOR is not the way around as very simply the interest willm not be deductible.
Set up a new loan secured against your PPOR (not redraw) and use this loan to fund the 20% deposit and acqusition costs on the new IP. Then take out a new loan for 80% of the purchase price secured against the IP itself.
A good mortgage broker shoould be able to assist you in structuring it correctly.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agree with Richard.
Get a loan secured against your PPOR to fund the 20% deposit + costs and a second loan secured against the new IP for the remaining 80% for maximum tax deductability.
Luke.
I recently bought an investment property. I went through the same lender that i used for my PPOR. I had about $15,000 in redraw on my PPOR and the bank was willing to give me 90% of the two property values minus what I owed. So in doing so I had to some of the redraw to help pay for the investment.
If I was in your situation, I would stop making payments to the loan for your PPOR. Borrow against your PPOR. Claim the interest lost at tax time and use the tax return to pay off your PPOR. This means that you can keep your redraw funds for emergency situations.
I have friends that only owe one more repayment on their houses but still have 10 or more years left on their loan. This means they only pay interest on $500 instead of %100,000. Then they can take some of the redraw back when they need to pay for things like car breakdown or hospital bills.
But then again I have only just bought my first investment, so I may not be the wisest owl on this forum. You could always talk to a financial advisor. The first chat is usually free.
Hi Investhut,
Take Richard's advice on this one. DO NOT re-draw on your current mortgage to pay a deposit on your investment property as this would not be tax-deductable debt. Instead, borrow 100% of the costs of the investment property, the equity in your existing property securing the deposit (there is a chance your re-draw facility will be reduced but that's fine – you would have used that money anyway and this way you have maximum tax deductions on your interest).
Make sure you chat to a broker before you do anything – your account set-up is critical to your success as an investor (and it's something I screwed up with when I started investing). Ask the experts and don't make the mistakes I made!
Good luck,
DenAgree 100%. Sort it out correctly from the start and make sure you have someone that's looking after your interests.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
thankyou all.. this makes so much sense
really this forum is the best.
i will see mortgage broker over weekend n sort the loan out…
where i am looking i am getting 7-8 mins walk from station fibro home for about 330k or bit less. it its a bargain.
also there are 3 drive from station 3 bedroom brick home… for same or bit more…
any suggestion here folks?
with the way petrol prices are n traffic in sydney… i think fibro close to station will do better in 5 years time???
Hello Investhut
Get the right advice from a finance company who know investment finance.
With your income you had better watch you do not increase your threshold by paying into an old fibrosis home ‘which will b e very short on depreciation’.
My suggestion would be a new home that is close to cash neutral and whilst your wife is still in work, that will be easy to achieve.
I may also suggest a display home in a display village with guaranteed rental income for a period of one + one + one.
Send me an email and I can send you figures that you can work with.
Regards
Kevin
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