Hi,
I've noticed on all the home loan calculators that it gives you the option to pay interest + principal or just interest.
How does this work? Do you have to rely on yourself making extra repayments to pay the principal off? Any benifits / pitfalls of doing it this way?
Cheers,
C-manHi C-man
Generally speaking, interest only with an offset account will provide all the benefits of a P&I loan but with greater flexiblity. However, it's not for everyone – particularly those who aren't disciplined savers and will simply pay the bare minimal interest repayments each month.
What is the purpose of the loan that you're looking to take out? Owner occupied or investment property?
If owner occupied, do you think it will ever turn into an investment property down the track?
If an investment property, do you have any non deductible debt such as an owner occupied home loan, car loan, personal loan, credit cards?
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 have a personal loan and that is all.
I would like to go straight for an investment property as it would be cheaper for me to rent a place and own an investment property then live in a PPOR. Unless I live in it for the minimum required time and then change to an IP?
Hi c-man. That is what many people on this forum do for their first property- buy an IP but live in it for a short time (say a few months) and then move out so it is CGT free.
So buy the first house with your FHOG and then move out asap and make it an IP? And that will avoid Capital Gains Tax?
also what is the minimum time required to live in the house? I have read 2 years?
For FHOG you will need to read up the office of state revenue for the rules. In NSW I think it is you need to live in the house for a minimum of 6 months commencing within the first 12 months of settlement.
I am pretty sure there is no time limit for claiming CGT exemption- just stick to the rules for FHOG and you should be fine.
Cheers,
LukeIf it's an IP and you have non-deductible debt then I'd be looking at setting up the loan as IO with an offset. Wouldn't be a bad idea to speak with a decent broker about your plans.
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 financial adviser tells me to buy an IP paying IO,not really keen on that,it is easier on the pocket though,but wouldnt be better business if I pay Interest and Principal as well?
Cheers…
Mozy sounds like you should be getting a new Broker on board.
Cman as has been mentioned previously there are 2 points to bear in mind.
1. With the FHOG you need to occupy the property for 6 continous months commencing within the first 12 months.
2. With the Stamp Duty concession this will vary from State to State. In Qld for example it is 12 months but this may be different in Vic or NSW.
You may loose the Stamp Duty concession if you buy an investment property first but with the FHOG you will still get this.
There are the odd lender who will do 95% on a standalone basis without any genuine savings so this might be an option.
You could take the SD Concession meaning less required deposit pocket the FHOG and use it for your first IP.Cheers
Yours in Finance
Personally i wouldRichard Taylor | Australia's leading private lender
Mozy wrote:My financial adviser tells me to buy an IP paying IO,not really keen on that,it is easier on the pocket though,but wouldnt be better business if I pay Interest and Principal as well? Cheers…Hi Mozy – here's a blog entry on the topic that you might find useful.
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]
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