My wife and I will be purchasing our first property in early 2012.
We have two options:
1. Purchase in Canberra and live in the property for 12 months, will receive the first home buyers grant + Defence first home buyers grant + Defence susidised loan.
2. Buy a investment property in SE QLD and do not receive any of the grants.
Obviously Canberra seems like the better option due to the grants but its just so expensive in ACT and SE QLD looks more promising for a boom.
Just wanted to see what you guys and gals think of these two options??
Cheers in advance.
Is there any reason why you cant do both.
Buy the PPOR in the ACT and put down minimal deposit, take advantedge of the Grants and concessions and then buy your IP
up here in SE Qld.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Well I guess that is an option, but if I dont put a %20 deposit into the Canberra place then I will get stung with the mortgage insurance! ouch….
Then again this may be a wiser option in the long term.
FYI I will have between 65 – 70k deposit
Hi Glenn
Thats not quiet true but might be if you have to go thru a recommend Defence Force lender in order to get your subsidy.
If you structure it carefully you should be able to get the LMI as a deductible expense anyway.
Remember LMI isnt a bad thing it is an opportunity cost of doing business.
There are many ways to reduce it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
LMI is not the end of the world- it can work to your financial advantage in the long term if structure correctly and done with the right lenders + good balance of % and deposit bwt the 2 places.
Ideally you want to push the LMI towards the IP, but not to much as there are different level of cost when you go over a certain %. Also 2 another options comes to mind
1. there are lenders that offer’s no LMI at 85%. At if your a doctor or a CPA ( 5 years +) you can get NO LMI at 90%.
2. Lenders that offer a Credit card at home loan rate on top of your HL – you can use this Credit card as your next deposit and you can structure it in a way so that the credit card is a separate account to your HL ( like a LOC) so that it can be tax detectable as well.Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Hi Glenn
I think you should buy a boat and a Jetski and live in my rental property in SE QLD instead.
Jokes aside,
The biggest issue with the DHOAS subsidy (besides having to use only the NAB) is that it doesn’t have the option to go interest only if your using it for a IP. If you were to go down the route of 1 x PPOR and 1 x IP it wouldn’t be a drama, using the subsidy and grants on the PPOR and then getting an interest only loan for the IP.
Remember you also need to live in it for 12 months to get DHOAS so if you aren’t posted to Brisbane then you won’t qualify for it, though you can use it whenever you want disregarding if you already own a property or not.
Having gone down this path before, although my deposit wasn’t as large, I bought a place in SE QLD lived in it for 12 months, and qualified for the double first home buyers, DHOAS and HPAS (thanks Kevvie but you still ruined the country). Posted to Darwin and have rented it out for the last 2 years and have it nearly cash flow positive, the only bug bear I have is that now I can’t move it to a interest only loan and still receive the DHOAS subsidy which as you know is quite sizable.
I’ve been paying extra off, with the subsidy works out at about an extra repayment a month, to build equity. I’m going to scale those back as of next year and pay only the minimum with the ‘extra’ going into the offset account so it is still working against the loan interest anyway. With the view to getting another property in the next 12 months or so.
Sorry I have highjacked your thread with my story mate
but I hope it helps a little.
The offer is still open to live in my place, get that boat and we’ll go on holidays and leave the girls at home hahaCanberra for mine.
GC is in the doldrums (you could always argue you're buying low) and things need to change a fair bit for it to get moving again.
GlennFiltness wrote:Well I guess that is an option, but if I dont put a %20 deposit into the Canberra place then I will get stung with the mortgage insurance! ouch…. Then again this may be a wiser option in the long term. FYI I will have between 65 – 70k depositLMI doesn't need to be seen as a bad thing. I wrote an article for API the other day about how it can be used as to get ahead in property investing. The article is here
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]
I wouldn’t worry about LMI at all. If your spending $400,000 its not really that much of a difference in the life of the property. It is a difference if you refuse to pay it so do everything with a 20% deposit, then you may only be able to buy 1/2 as many properties in the long run than you could if you only paid 10% deposit and paid minimal LMI. LMI used correctly is an investment, not so much a cost.
Qld has some great growth areas, some better than others. South East Qld spans over 300km of the coast line so you may need to clarify if you are looking into any area in particular to get a better indication if it will be a good investment.
I like Richards earlier comment, take advantage of the grant, you may not even need much of a deposit after them and then buy an investment property soon after that is positively/neutrally geared then it wont cost you any extra.
Regards
Heh Derek
Brisbane is also SE Qld and we certainly are not in the doldrums.
Brissie and the GC are 2 different markets at the moment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Good to see my old mate Bronco stalking me on the forums hahaha. Cheers for the information everyone. And Morgan I have looked into DHOAS a lot more and can see where you are coming from with not being able to make it interest only, they also have some restrictions on claiming tax in the first year. So will definitely do some balance sheets and weight up DHOAS vs Investment property.
People are making alot of sense and have made me look into LMI in a different light.
Just shows how much I have to learn
but I guess im in the right place to do this.A friends has recommended an investment company who I am currently in contact with and discussing some options, so will see what happens.
Qlds007 wrote:Heh DerekBrisbane is also SE Qld and we certainly are not in the doldrums.
Brissie and the GC are 2 different markets at the moment.
Not wrong about the two cities being different markets.
Keep forgetting you guys have just about merged into one big city.
Good to hear about the Brissy market going OK. Gold Coast has taken a big hit (as a broad brushed statement) and I do wonder when the corner will be turned. For me there needs to be a lot more water flow under that bridge yet.
Yes SEQ is a diverse range of markets, a lot depends on the specific price range and location on how property has performed.
but I hope it helps a little.
but I guess im in the right place to do this.
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