Hi all, my name is Lawrie from QLD. I've looked at the last 10 pages worth but felt i should post as my situation is slightly different to what ive seen.
Wife and i bought a townhouse Nov 2008 which we currently live in:
Asking Price: 350k
Bought for: 330k
Loan amount: 317k
Principal & Interest loan on basic package with ING Direct (no offset)
5.89% (Locked for 3 years mid last year)
Bought a car for $30k which is under a car loan from St George for a much higher interest rate. Still owe $26k.
2k cash in savingsWhat we would like to do is buy a new house as our PPOR and make the townhouse an IP. However, i still have the car debt and can maybe only get 40-50k worth of equity.
I believe i should be using the equity to pay for the car first, as i cannot sell it anyway if i need to unless i own it fully. But in doing so i lose the equity for a new home. Is there another way to restructure ourselves?
It may also be an option for us to move back to relatives for a short period of time (6-12months) and i worked out we could save around 3k per month in doing so. If we were to save this cash over 12 months, what would be the best thing to do with it?
Rgds
LawrieYou should change your home loan to IO asap. Otherwise you are diverting money from your new PPOR. You could also consider using the savings from there to pay off the car loan asap as you will be paying a higher interest rate there,
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
thanks Terry, i hope there's not a huge fee involved in doing this. I'll check with ING tomorrow and see what it costs to change to IO.
I'm probably looking at saving $300/month by doing so. What about using the equity on the home to pay the car off though? As it would effectively bring the interest in line with the home loan. I'm surprised you didnt mention that at all.
If the car is used for business and the interest deductible it probably would be ok, but otherwise it won't be good to mix investment and personal expenses.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I dont think you can switch to IO with ING during a fixed rate period.
Richard Taylor | Australia's leading private lender
I called them and they offered me break costs which would be the sum of the interest they would have lossed the for remainder of the 3 years the loan was fixed for. Not worth it….
Doesnt look like i can get much help now. Moving back with relatives to save money seems like my only option…
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