Terryw wrote:
Yes, you will have to pay interest on all borrowed money. But what is the alternative?if you cross collateralise you will be in a worse situation, security wise, and have a messy problem in years to come. You will also be borrowing more (same as my method) so it will cost you the same.If you use cash, that is cash which could have…[Read more]

Qlds007 wrote:
Point take DanTo correct  – F could borrow 90% of his current valuation =  $470,000 x 90% = $423,000 – existing loan of $360,000 gives $63,000.

Thanks for the clarification of this. It's a good ballpark figure that I can work with for now.

Terryw wrote:
When you use the equity in property A just think of it as borrowing from property A to fund property B.

Thanks for the response. However in this case I understand that I have to pay interest as with any other loan. As such, is there any real advantage to drawing out equity instead of just borrowing from the bank? The bank would…[Read more]

Qlds007 wrote:
If you use your own cash as a deposit remember you wont be able to have it back again and claim the interest as a Tax deduction. Most people want to keep their cash flexible as you never know when you might need it.

That's a good point. Better cash in my hand than somebody else's. I was just a little hopeful that using my own…[Read more]

Qlds007 wrote:
…the loans are separate and therefore not cross collateralised.

Sorry, what's the significance of this? Does it mean that the bank can foreclose on Property B and not Property A when I can't make the repayments?So from this I gather the following:- instead of using 90K of my savings as a deposit for property B, I can use 88K…[Read more]

Thanks Mike, for the speedy response and the detailed, informative report. It holds useful information for research. This act of kindness would certainly benefit many.

propertunity wrote:
It's perfectly legitimate to accept contributions to household expenses and not declare them, provided 1) you're not doing it primarily for profit (eg if this was your primary source of income), and 2) you don't claim the expenses they're helping pay, such as mortgage interest. The contributions are not income; it's just that…[Read more]

number 8 wrote:
There is no need to air your dirty laundry here…….. Renting out rooms has CGT consequences as well……   I cannot say what to do here but I know a lot of people that will put there hand up for that free rent…..Leigh Birchhttp://www.birchcorp.com.au

Thanks for your response. Deciding to post questions on this issue was a care…[Read more]

Terryw wrote:
Thats true. No good having an offset account if you are a spender.

This will be a real test of discipline I guess…to put the money there and not spend it except if necessary for daily expenses and emergencies. I'm sure there's lots of people out there who promise to save and subsequently don't, and I might be one of them. Thus…[Read more]

StumpCam wrote:
Hi Fword, just a slightly different train of thought. There isn't much difference between an IO loan and a P&I loan in the first few years if you've set it at a 30 year term. If you're going to live in it forever after renting it for a few years, then there's a lot to be said for P&I. It's just too easy to rob the offset account,…[Read more]

Terryw wrote:
Since you are going to move out of the house and rent it, you should not pay PI or any extra into the loan. Best to use a 100% offset account with an IO loan – and use your point generating credit cards as much as possible.

The situation is a bit of a funny one. The house is neither an investment nor a house I'm going to be living…[Read more]

wisepearl wrote:
*100% offset account, with no monthly fees and unlimited transactions*have all income paid into my mortgage*live off my credit card, then pay it off in full each month from mortgage*every extra $$ over and above minimum interest repayments sat in offset account, available for redraw any time, and reduced interest payable on…[Read more]

fWord wrote:
I'd be very interested to know how to recover the $375 cost (assuming it's application fee we're talking about) on a single loan.[/quoteSorry Richard, I meant 'annual fee', not 'application fee'. The pro pack may also come with an application fee.

Qlds007 wrote:
Not sure what rate you are on or the loan amoutn but most clients would get the $375 back several times over even with just one loan.

The Homeside variable rate is currently 5.07%, and is not a 'honeymoon rate'. No application fee, legal fees $162.50, monthly fee of $10. Loan is 300-350K.I'd be very interested to know how to…[Read more]

Qlds007 wrote:
Unless he is investor orientated i bet he will have no idea or would have recommended this from day 1.You can transfer funds at any time to pay down the principal balance should you wish.Loan must have been very small as most client look at the Pro Packages and that has no offset fees. 

It wouldn't be surprising if I were one of…[Read more]

Qlds007 wrote:
Unless he is investor orientated i bet he will have no idea or would have recommended this from day 1.You can transfer funds at any time to pay down the principal balance should you wish.Loan must have been very small as most client look at the Pro Packages and that has no offset fees. 

It wouldn't be surprising if I were one of…[Read more]

Kramulous wrote:
If the offset comes with no monthly fees, I'd be going for it.  If you make extra repayments and then turn the property into an investment, you will be unable to get the extra payments out of the property without experiencing the wrath of the ATO.  While it is an investment, you want the interest payments to be as high as p…[Read more]

Qlds007 wrote:
Yes Interest only gives you far more flexibility as what may be your PPOR this year and possible next year may one day become an IP.Why box yourself into a Tax corner when you dont need to.

The IO payment is an interesting concept I'm very new to. Still have the 'old' thinking that I should eventually try to pay down the loan so I…[Read more]

Qlds007 wrote:
Yes Interest only gives you far more flexibility as what may be your PPOR this year and possible next year may one day become an IP.Why box yourself into a Tax corner when you dont need to.

The IO payment is an interesting concept I'm very new to. Still have the 'old' thinking that I should eventually try to pay down the loan so I…[Read more]

Qlds007 wrote:
Yes Interest only gives you far more flexibility as what may be your PPOR this year and possible next year may one day become an IP.Why box yourself into a Tax corner when you dont need to.

The IO payment is an interesting concept I'm very new to. Still have the 'old' thinking that I should eventually try to pay down the loan so…[Read more]