Hello from yet another long time lurker and seeker of wisdom.
In the process of applying for a loan on my first investment property, I have come to a fork in the road.
Quick basics: have enough for a 20% deposit, however will put down 10% and use the rest in an offset until I find the next property.
A friend has pitched the idea of using the ‘spare’ cash to pre pay my interest instead. Considering that my living expenses till early next year are going to be very low and I will be able to set aside at least another $12k in the next 6months, this should set me up for the next deposit fairly quickly. I don’t yet know which way my tax will go next year- could go up or could go down.Need to make up my mind fairly quickly as I need to finalise the finance asap. Thus asking advice from the wealth of experience here.
Would you in the current market fix?
or would you retain flexibility?Many thanks in advance, firstly for reading, but mostly for replying.
Have yous considered if you dont fix and prepay again next june you will have a higher tax bill next year. ie you will have rental income but not much in deductions.
Also most are suggesting rates may fall again in the near future.
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
Terryw wrote:Have yous considered if you dont fix and prepay again next june you will have a higher tax bill next year. ie you will have rental income but not much in deductions.Also most are suggesting rates may fall again in the near future.
of course! i'm also considering buying 1-2 more properties in the next year, too, which can be used to decrease the tax bill.
I'm trying to work out whether pre-paying by the same amount as offsetting will save me more money, which is of course hard to ask without considering things like income, liabilities, deductions, future strategy..i'm also partially trying to find out whether there are other pitfalls which I haven't considered
I have variable interest only loan . how do I pre pay the interest ? just transfer extra money into home loan ? or is there a special procedure with the bank?
Thanks
MayuranMayuran wrote:I have variable interest only loan . how do I pre pay the interest ? just transfer extra money into home loan ? or is there a special procedure with the bank? Thanks MayuranTransferring extra money into a loan will result in the repayment of principle.
You have to change your loan to a 1 year fixed and pay the interest up front. Probably too late for this year if you haven't begun the process yet.
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
thanks Terry
Terryw wrote:Mayuran wrote:I have variable interest only loan . how do I pre pay the interest ? just transfer extra money into home loan ? or is there a special procedure with the bank? Thanks MayuranTransferring extra money into a loan will result in the repayment of principle.
You have to change your loan to a 1 year fixed and pay the interest up front. Probably too late for this year if you haven't begun the process yet.
Yep – I think that boats sailed. Only a couple of weeks left to EOFY.
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]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
