First Home Advice

Hi Guys,

I am about to buy my first property.  I will be using the FHOG and it will be my PPOR for at least the next 12 months.  My goal is after 12 to 18 months to convert it into an investment property.  Now while I am on a decent income my wife is still at UNI and will be until the end of next year so we currently only have around a 3% deposit.

Now I am wondering if it would be better to delay purchase until we have a bigger deposit or even continue renting and to save a larger deposit to purchase a property that will be only an IP.  Using equity and profits from the IP to enventually buy a house to live in.

Basically my goal is to get into investment property as soon as possible and would like to hear opinions on what is the best approach for someone in my position.

Thanks

Hi Matt

Firstly welcome to the forum and I hope you enjoy your time here.

Personally would get proper advice before you jump in as in most cases the PPOR is purchase as Joint Tenants with you both equally and severally liable for the debt.

Given the information you have provided about your intension to eventually rent out the property both the structure of the loan and the name on the title needs to be considered.

Remember if you intend to rent out the property you would want the loan structured on an interest only basis and therefore it would be wise to do this from day 1. Many lenders will not accept an interest only loan on your PPOR but a good mortgage broker should be able to help.

Secondly as the interest will be tax deductible once the property is available for rent then you want to ensure that you keep your gearing level up and do not want to be using too much of your funds as deposit. A 100% offset account will give you the same net interest saving yet protect the deductuble statius of the loan down the track.

Now onto the title.I assume that when your wife leaves Uni she will obtain employment but probably still be on a lower marginal tax rate than yourself. Consider buying the property as Tenants in Common with you holding say 90-99% of the shares and your wife the balance.

This will give her peace of mind when it comes to the asset ownership but also assist you down the track if the property is negatively geared and you need to claim the majority of the deductions in your name only.

Drop us an email if you need any further information.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

Hi Matt

Firstly welcome to the forum and I hope you enjoy your time here.

Personally would get proper advice before you jump in as in most cases the PPOR is purchase as Joint Tenants with you both equally and severally liable for the debt.

Given the information you have provided about your intension to eventually rent out the property both the structure of the loan and the name on the title needs to be considered.

Remember if you intend to rent out the property you would want the loan structured on an interest only basis and therefore it would be wise to do this from day 1. Many lenders will not accept an interest only loan on your PPOR but a good mortgage broker should be able to help.

Secondly as the interest will be tax deductible once the property is available for rent then you want to ensure that you keep your gearing level up and do not want to be using too much of your funds as deposit. A 100% offset account will give you the same net interest saving yet protect the deductuble statius of the loan down the track.

Now onto the title.I assume that when your wife leaves Uni she will obtain employment but probably still be on a lower marginal tax rate than yourself. Consider buying the property as Tenants in Common with you holding say 90-99% of the shares and your wife the balance.

This will give her peace of mind when it comes to the asset ownership but also assist you down the track if the property is negatively geared and you need to claim the majority of the deductions in your name only.

Drop us an email if you need any further information.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

Hi Matt, I think your plan to buy a place now and convert it into a rental in 12-18 months time is a great plan. It's good to just take action and get started. If you don’t have a big deposit, you can still buy a property. You may have to adjust what you’re looking for accordingly. Go for a unit rather than a house, look a little further from the CBD or buy a property that needs renovation.

Cheers,
TJ

Thanks for the advice guys, The areas we are looking all look prime for capital growth,  They are further out from the CBD but not to far.  They all have either major infrastructure coming their way or border areas ear marked for Urban Development.  The plan is to buy a house on a decent sized block 600m2 + as most of the areas I am looking at have been rezoned to allow higher density   which I am assuming will help capital gains.  All the houses are also within walking distance to train lines and close t major shopping centre's. 

Is there anything else i should look out for that will be important for when it becomes a rental.  I know the capital gains  have no influence on the rental side of things but is a nice bonus.

I think I will buy now, having watched the market for the last 18 months I've seen prices in Brisbane continue to rise until very recent small price drops.  Most of the areas I am now looking at have not dropped in price but i have noticed properties on the market for up to 3 months.

I think my best bet though would be to seek professional advice, we already have an excllent mortgage broker however a financial advisor who has experience in proprty is probably a good idea. Is any one able to recommend on in Brisbane, specifically on the northside?

Thanks again for the help.  Heh I knew I'd been lurking these forums for a long time but until this post I hadn't realised its been 4 years lol.

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