Which way to go?

Hi Everyone,

Thanks..

hi trig,
I would research where I could buy an  investment property  to see what property forecasters are
commentating on future growth potential before doing anything!!!..  if like in Adelaide or SEQ they are estimating
25% growth between now & 2011 I would certainly look at it, as potentially a capital gain like that could in essence pay off half your loan $60-75,000 (forgetting about CGT at moment as that can be minimalised dependant on your capacity to write down tax).
If you find out there is not much hope of capital gain in your area for next 3-5 years I would pay down on my mortgage & by doing so prepare yourself for when the time is right for you to jump in prior to growth...
but I would also organise a line of credit in the meantime to maximise interest savings.

Hi Trigger22,

Potentially, you can do both.  You've built up some equity in your PPoR that you could utilise via setting up a line of credit.  You can then continue to pay down your PPoR loan (non deductible debt) whilst utilising the equity funds for investing purposes.

Just make sure you get the whole thing property structured so as not to mix up the two sets of funds, as the government is very strict with what you can and cannot claim.  Keep it all separate.  Speak to a good finance broker first to sort it out for you.

Wendy
http://www.realestatewomen.com.au

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Personally I would look to do both however i would be careful how i structured it.

Unless your current PPOR is likely to be your home forever i certainly wouldnt be paying off the capital as quickly as possible and in fact would be switching the loan to interest only linking this to a 100% offset account.

Then careful planning the loan to ensure that your home and new IP are not cross collateralised.

The way in which you set the loan up will not only give you the same interest saving as a Principal & interest reduction but also provide flexibility in case down the track you decide to rent out the property and buy another PPOR.

Definately make sure your mortgage broker is au fait with investment structures.

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.
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