Hi Elizabeth,

Your current lender would be determining your accessible equity using the valuation they have on file, which may or may not be old, depending on when the loan was set up. If it was a while ago, you may have more, the same or less equity available, depending on the market you are in. It would be well worth your while engaging a…[Read more]

Hi Adam,

It doesn’t make a lot of sense to make a decision based on what has already happened, if anything it should be easier to decide to sell at a loss as you receive a future tax benefit rather than a liability if sold at a profit. I strongly suggest that you make a decision as to what the future holds for the area and how holding the…[Read more]

Hi Dana,

The only answer you will get to that question is in hind sight. Sometimes units perform better, other times houses, depending on the time frame you are looking at and the demographics of the market. In the very long term land does not lose value while buildings degrade, which would suggest something with land content should be a better…[Read more]

Hi Dana,

Where do you want to live ultimately? If it is in Sydney then buying an investment property there makes sense as it means that any further strong growth in that market will benefit you, whereas if you are not in the market it may be significantly more difficult to enter in the future. Conversely if the market does not grow strongly, or…[Read more]

Hi Andrew,

One thing to look out for when making an application for the cash out portion. There are many lenders who will flat out not lend for the purpose of paying a deposit on a commercial property, they consider this a business use and will try and push you into a more expensive business facility. You need to use a lender that will either not…[Read more]

Suncorp used to be very good for this sort of loan, as they didn’t have a premium on their LOC, but clearly they are not competitive any more. You can set up an appropriate structure, as per Richards suggestion, and pay under 4% for the money.

Regards

Hi Craig,

If you don’t think there will be much growth in the property then its really a no brainer, sell it. Nobody can be certain as to what will happen with property prices, as long as you make an informed decision you should be content that it is the best decision you could have made at the time, whatever happens.

I’ve always thought that…[Read more]

I already have a decent sized property portfolio, I’m just sitting on it and reducing debt through cashflow. Outside of properties I have invested in a number of gold producers on the ASX, as I see gold as a good hedge against any further crises in financial markets and also against falls in property prices. However, I sold out of these positions…[Read more]

I already have a decent sized property portfolio, I’m just sitting on it and reducing debt through cashflow. Outside of properties I have invested in a number of gold producers on the ASX, as I see gold as a good hedge against any further crises in financial markets and also against falls in property prices. However, I sold out of these positions…[Read more]

You can’t know the future, you can only predict. Taking any sort of leveraged position is always somewhat of a gamble on the price going up, sometimes you will be correct and sometimes not. The problem with OTP properties as compared to existing properties is that a reduction in value can create an issue with settling, whereas there are no margin…[Read more]

I don’t think it is correct to say that OTP properties are rubbish, though certainly a lot of them are. What people considering these types of properties have to recognize is that they are playing a leverage game, if you can contract a property at today’s prices but settle in 2 years and prices are higher then you will have made a very good ROI.…[Read more]

Hi Catts,

I don’t disagree with your assessment of the world economy, although I don’t believe the US is in very good shape at all. The major difference between now and pre GFC is that a large proportion of the risk lays with Governments and Central banks, most of whom have large debts denominated in their own currencies. Countries that issue…[Read more]

The CBA offer at the moment is pretty compelling, but there are also some smaller lenders that are very competitive. We have a white labelled Resimac product that is at 3.99% (term loan with offset or LOC) with no penalty for interest only, but the catch is that it has to be secured against a PPOR. We had the same rate for IP’s for a while, but…[Read more]

Hi Mark,

Primarily they can reduce interest rates which would most likely have a positive impact on property prices. A significant drop in property prices would have a dramatic effect on the stability of the banking system, so while they want growth reduced and are actively seeking this through various policies they do not want prices going…[Read more]

I think the question of whether house prices are in a bubble is a very interesting one. My personal view is that they are, but I also do not think it will be popped any time soon. There are too many vested interests in their not being a correction, notably the banks and the Gov itself. Having said this, I have no doubt that at some stage this will…[Read more]

Hi JT,

When considering high yield properties you must recognize that their prices tend to be very volatile. Mooranbah is perhaps an extreme example of this. This can, of course, work in your favor but it can go both ways. For the most part people who are starting out lack for capital rather than income, if this is the case for you it is probably…[Read more]

Hi JT,

When considering high yield properties you must recognize that their prices tend to be very volatile. Mooranbah is perhaps an extreme example of this. This can, of course, work in your favor but it can go both ways. For the most part people who are starting out lack for capital rather than income, if this is the case for you it is probably…[Read more]

Hi Pete,

I suspect Richard will have this situation sorted for you pretty quickly. Goof luck and make sure you come back and let us all know how you go.

Regards

Great post Jacqui,

There is a lot of poor advice given, particularly in the media, with regard to whether interest only or P&I loans are preferable. The fact is that all you are doing by paying down a loan is reducing the options you have with your available cash, and potentially costing yourself money in reduced future tax benefits. In the case…[Read more]