My wife and I are unsure of what to do/where we stand. We are currently looking for another PPOR, we will be selling our current PPOR and looking to spend a little more on the new one. My question is for people who are in the industry who've done this before:
Did you sell first then buy?
What do lenders do with a mortgage if you've bought a PPOR and haven't sold your previous one?
Can you start paying the new mortgage later?
We were thinking it may be better to sell the current PPOR then we'll have a better idea of how much we have to spend.
Advice would be greatly appreciated.
There's a few options.
1. Have you considered keeping the current PPOR as an IP? With this option, you could possibly access equity in the current PPOR which will be used as the deposit/costs on the next PPOR. There's a lot of other factors to consider here though.
2. Sell up and use proceeds to purchase next PPOR.
3. If your borrowing capacity allows then bridging finance could be an option.
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]
This may be an opportunity to get your structure set up 'right' so talk to a knowledge advisor first.
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
As much as I'd like to, we can't afford to make the current PPOR an IP. We already have another IP and intend on keeping that one.
We would definitely sell the current PPOR and put the proceeds towards the new PPOR.
If you decide to go down the bridging finance path where you decide to buy first and sell the current property later, there are lenders out there who will allow no repayments for the bridging loan period (interest is capatalised onto the loan instead).
However if you don't sell your current property during the bridging loan period (max term is dependent on the lender), then you're up for repayments on both loans.
Cheers
Tom
booge wrote:As much as I'd like to, we can't afford to make the current PPOR an IP. We already have another IP and intend on keeping that one.We would definitely sell the current PPOR and put the proceeds towards the new PPOR.
Look's like you've answered your own question Booge. Seems like it's best to sell up before buying.
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]
Usually the best option is to sell first then buy as you are free of your mortgage for a while otherwise the agent will put additional pressure on you to take a low ball offer to close the deal and you will lose out.
Hi booge
When you ran the numbers to see whether you can afford to keep both properties did you factor all of the deductions you could claim on your current PPOR which of course will be the new IP.
Deductions would include both cash and no cash deductions and you maybe pleasantly suprised as to how much the real bottom line is.
Even if you decide to sell the PPOR you might be able to structure the loan in such a manner that you can buy the new PPOR prior to selling.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
A few of you have mentioned bridging finances, could someone explain in simple terms what it actually is? I have a very rough understanding of it.
Hi Joe
Certainly it usually involves short term financing to bridge the amount required to purchase the new property whilst you are selling the old property.
Assume you own a property with an estimated valuation of say $400,000 and owe the Bank $100,000
You want to purchase a new property for $500,000.
The Bank would lend you $500,000 giving you a total loan of say 600,000 based on total security valuations of $900,000.
Interest would be charged on the $700,000 which might be capitalised to the loan until the initial property was sold.
On settlement of the sale of the first property the lender would want the loan reduced within acceptable lvr's
There are a couple of variations on the theme but in essence the end result is the same.
Hope this helps.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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