purchased ppor

Hi David

Buying your first property is always an exiciting time.

What are your longer term plans with this property? Do you think it will ever be turned into an IP?

Being on an investment property forum, I assume you're looking to get into purchasing investment properties in the future?

Cheers

Jamie

Hi Dellas,

On the proviso you are disciplined with your money I would put minimum cash into the loan and put the remaining funds into an offset account.. This maximise your flexibility going forward and gives you a cash buffer should the wheels fall off your life at some stage in the future.

Should you or your partner need to move for employment opportunities this structure also gives you relative freedom to do this without any major tax issues going forward.

Doing this also gives you and your partner time to firm up your long term property plans.

Hi Dellas,

Given this is your first property and you have no other security you will need a cash deposit.

Reading your post above it would appear as if  the bank is lending at 80% – did you enquire about borrowing at a higher loan to value ratio?

In this scenario you are using $93K of your savings and retain $54K

If, for example, you borrowed 90% of purchase price you would borrow $405K – because  you are over 80% the bank will charge you lenders mortgage insurance of around $8K.

Approaching your borrowing this way you only use $53K of your borrowings and you retain $93K of your savings – coincidentally almost the reverse to the current option.

Note I am assuming valuation at $450K in my calculations here.

Food for thought?

Good point about the valuation Derek.

Dellas, as settlement is over a year away, the lender won't approve any loan until closer to settlement. That's when they will also do their valuation, and there might be a chance that the market might drop causing a lower valuation than the purchase price. Depending on what that is, you might have to actually put in more deposit than first thought. You won't really know until late next year.

Cheers

Tom

Hi Hermelinda,

Of the three options you have provided I would always choose real estate investment. Mind you if you  posted exactly the same question on a share forum you will get a high proportion of people saying shares.

You are the one that is going to need to make the choice on this and the sum of money you receive will also play a part in which asset class you choose to invest in and how you go about it.

By your own admission your level of investment knowledge is limited – for this reason I would seriously consider placing all of the money in a fixed term deposit (say around 6 months) and spend the time reading, reading, reading to broaden your knowledge levels.