Reading the forum, i think i may have made an mistake when setting up the loan for my PPOR by using a P&I loan instead of IO – therefore I am thinking it wont be feasible to rent this house out??
PPOR worth $350k and a mortgage of $225k (P&I loan). I have an offset account connected, however before I new about this feature (from this forum, thank you) I had placed approx $10k into the home loan and then took it back out and placed in offset.
In the next 1-5years I would like to move into a different PPOR. After reading the above, I am assuming that I would be better off selling my current PPOR and place the additional money in an offset account to the new home.
1) Is it to late to change my home loan to Interest Only, so that I can rent my current PPOR and move into another PPOR?
2) Is it ok if i use my equity in my current PPOR to buy my first IP then eventually sell PPOR and buy new PPOR? or would it be recommended to not to buy an IP until I move into a new PPOR?tigermiger wrote:1) Is it to late to change my home loan to Interest Only, so that I can rent my current PPOR and move into another PPOR?Hi tiger – nope, you should be able to switch to IO now.
tigermiger wrote:2) Is it ok if i use my equity in my current PPOR to buy my first IP then eventually sell PPOR and buy new PPOR? or would it be recommended to not to buy an IP until I move into a new PPOR?Yep. When accessing the equity, set it up as a second split to your current PPOR mortgage. That way you have separated your deductible debt (deposit and purchasing costs for IP) from non-deductible debt (PPOR loan). If you sell your current PPOR – you could take the proceeds and place it on your new PPOR (place it in the offset account this time – not on paying down the principle).
Cheers
Jamie
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]
Thank you Jamie.
No worries Tiger. How did you go? Did they switch it to IO for you?
Cheers
Jamie
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]
My partner and i have since deceived that we will stay in our PPOR for about another 2-5years.
I met with the bank and they mentioned that i can switch to IO with no charge, however they recommended to stay P&I and when i purchase my first IP to ensure that that loan is IO.
tigermiger wrote:My partner and i have since deceived that we will stay in our PPOR for about another 2-5years.
I met with the bank and they mentioned that i can switch to IO with no charge, however they recommended to stay P&I and when i purchase my first IP to ensure that that loan is IO.Hi Tiger
Do you intend to convert your current PPOR to an IP? If so, then I can't understand why your lender would recommend you keep your current PPOR loan as P&I.
Cheers
Jamie
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]
50/50. If we had enough money, i would hope that one day we would rent it otherwise we would sell it.
CBA said that i would want to keep it as is to pay more money off the loan for the mean time and then change it later if i decide to rent it out.
tigermiger wrote:50/50. If we had enough money, i would hope that one day we would rent it otherwise we would sell it.
CBA said that i would want to keep it as is to pay more money off the loan for the mean time and then change it later if i decide to rent it out.
That's extremly poor advice and will end up costing you money. By paying down more of the principle, you will be reducing the amount of deductible debt you will be able to claim once it turns into an IP. It would be in your best interest to switch it to IO now with a MISA account attached. Instead of paying down more principle, place the money in the MISA account (which will have the same effect). When it turns into an IP, withdraw the money from the MISA and this will boost the IP debt back up.
Cheers
Jamie
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]
Well said Jamie and it's great advice!
Kind regards,
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