All Topics / Help Needed! / Wait for equity or spend savings

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of BeebobBeebob
    Participant
    @beebob
    Join Date: 2012
    Post Count: 2

    Hi all,

    Bought our PPOR 14months ago, and have paid off $18,000 (Still owe $435,000) paying P&I.
    We have $60,000 sitting in an offset account. Just wanted some advice on whether to whack it all on the mortgage and wait to hit the 20% mark then use the equity, or instead use the offset money for a deposit.

    We have a combined income of $170000.

    Pros/cons/advice would be hugely appreciated. If you need more info just ask.

    Thanks!

    Profile photo of bullet46bullet46
    Participant
    @bullet46
    Join Date: 2011
    Post Count: 51

    Interested to see the replies as we are in a similar situation.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Beebob

    Will the next purchase be an IP?

    If so, by placing the cash from the offset back into the loan and reborrowing it for the IP, you’ve made the entire debt tax deductible. If you used cash for the deposit/costs, it wouldn’t be deductible.

    You’ll need to check with your current lender that you’ll be able to access those funds once they’ve been placed on the loan.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Think it logically thru.

    If you take th $60k out of the offset what will happen?

    A: Your interest on the home loan will increase by about $4,200 per year. This won't be deductible because it relates to non deductible loan expenses.

    Q: If you were to pay $60k off the loan and then reborrow it?
    A: If the new borrowings were used for investment purposes then you could claim the interest.
    Approx $4,200 in extra tax deductions. Approx $1953 saved in tax if on the top tax rate. This is each year too. Imagine how much sooner you could pay off your home loan with this?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of BeebobBeebob
    Participant
    @beebob
    Join Date: 2012
    Post Count: 2

    Thanks guys! Solid advice. I’ve got an appt with the bank next week so will hopefully have a good idea of where we stand.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi beebob

    Just make sure they understand investment structures and are on the same page as you. A lot of branch staff don’t have a clue – it sounds harsh but it’s a reality.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Aaron_CAaron_C
    Participant
    @aaron_c
    Join Date: 2012
    Post Count: 65

    Not harsh Jamie – they really have no idea.

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    Hi Beebob- may i suggest you call Jamie for a chat. Some bank people dont have a clue when it comes to investment loans, and to be fair some are very skilled at this type of loans.

    If you cann Jamie however, you can be assured that he is knowledgable and skilled at setting up investment loans correctly and can save you lots in the long term.

    Cheers,
    Luke

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    call Jamie rather, not cann!!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    I agree give Jamie a buzz and get it sorted properly.

    Think how much a mistake at your local Bank could cost you over the years when your Bank Manager has moved on and you are arguing about the loss of deductible interest to some spotty faced teenager.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

Viewing 10 posts - 1 through 10 (of 10 total)

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