Forum Replies Created
Hi Sonya,
Welcome aboard !! It is good to hear that you are looking for options – this means you have your future firmly in view. I think a good move for you is to keep on reading, checking, questioning, and working toward that future. A chat with one of the Mortgage Brokers would be useful too – they can take your whole financial situation into play when working out HOW to buy another property.For now, I just wanted to point out a common trap. And that is in thinking you have “80% of your equity available” !! It is not quite right, so let me set that right :-
You said :-
Assuming we can only use 80% of our equity to purchase another house that is still $150(?)k towards another house, plus the $80 cash we have, we should be able to buy another property even with the drop to one income.
The way to calculate what you can borrow is as follows:-
First, look at the “amount owing / house value”.
In the case of your PPOR, owing is $390k / value is $520k that is 75%. But you CAN’T borrow 80% of that remaining $130k (your Equity). Just $16k more will bring your total loan to $416k which is 80%.You could draw a bigger chunk of Equity by considering paying LMI and borrow at 90% (or 95%) instead of 80%. That would release another $78k (or $104k) for you.
With the Unit, things look a bit better – Owing $312 / Value $425 is around 73.5% LVR right now. By going to 80%, this releases $28k – or pay LMI and borrow at 90% (or 95%) to release $70k (or ~$90k). And HERE is where you need the services of a professional to run different scenarios for you in your circumstances.
WHAT you buy will play a part too – do you purchase another IP? Or another PPOR? Your answer will have a major impact on the outcome – or, the Mortgage Broker can chart BOTH scenarios, thus allowing you to make an informed choice.
Main thing is though, I hope you can now see that you can’t borrow “80% of your Equity” as easily as it sounds. You have about $240k in Equity, but to borrow 80% of that ($192k), you need to borrow it at an LVR of 95% plus !!!!
And don’t be concerned if it is all still not clear. Once you sit down and “do the numbers” with an adviser, it will become a lot clearer.
You are in good shape though, and I’m sure something can be done to improve your future with property. Let’s see what a MB tells you,
Benny
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This reply was modified 8 years, 2 months ago by
Benny. Reason: Fixing an earlier transcription error
Hi Ben,
Wow – sounds like a problem… and, no, I don’t think i have the whole answer, but wanted to share a couple of thoughts :-1. The home we bought 30 years ago had a similar thing. No slopes to speak of, but the thing that rocked me was that downpipes were ALLOWED to “splash-feed” onto the ground rather than being piped away (according to laws that existed back then). But then, I found the builder HAD installed underground pipes from our down-pipes – the underground pipes ran into the property next door – and stopped….
2. I don’t know how much rainfall you might get (especially when compounded by run-off down that slope), but maybe there is a chance of creating a “sink-hole” i.e. get in a bobcat and cut a big wide trench across your property, fill it with rubble, and allow the water to dissipate underground to surrounding soils. You would obviously need to check a number of things (via a hydrologist??) like :-
a. re your comment “The interesting thing though is the soil was not wet?” – does that mean the rain is soaked up by surrounding soils BEFORE it even gets to a depth of 30cm? In which case IS there any problem? Could it be that the existing easement and drain is more than sufficient as is?
b. do “problems created by past (inadequate but acceptable) laws” receive any leniency in rectifying the problem today?
c. what does your “neighbour with the big block” have to say? If they have never noticed a problem with your run-off, is there one?
d. what cubic capacity would the sink-hole need to be, how deep, and do you have adequate space to create it on your property?I have only a layman’s knowledge of water and its effects, but I recall hearing that heavy rains become a problem AFTER the ground surface soils have saturated – after that, any excess “runs off” without being absorbed. And of course, a steeper slope will have run-off occuring more quickly than a gentle slope (with the latter, water has more time to “sink into the gorund”).
Could some kind of action taken with your soil make it more absorbent to minimise any run-off (assuming you have grassed areas – no good if all concreted) – by action, I mean using a cultivator device of some kind to allow water to “sink” rather than running off. Or perhaps utilise products that could be sprinkled ON your grass (e.g. like those capsules that absorb water – used when planting to assure moisture to the new plants).
Hmm, maybe not much actual knowledge there, Ben – but hopefully some ideas that “might” work – good luck with it,
Benny
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This reply was modified 9 years, 10 months ago by Benny.
Hi Samson,
Hopefully, Terryw’s links will provide what you need to know.Re Andrew’s comment :-
Property A will be only partially exempt from CGT since it was rented out for 4 years. A property is only fully CGT exempt if it is your PPOR for the whole duration of your ownership.
…. I think Andrew might be presuming it was a renter from day one. Your words aren’t specific, but if it WAS your PPOR (i.e. you lived in it FIRST), and you kept it as your PPOR when you moved interstate , i.e. you didn’t nominate prop B as your new PPOR when you moved into it, then I believe Prop A could remain CGT exempt – even though it was rented. The rule might be that you must move back into it prior to selling to retain exemption – I don’t know – Andrew could be right after all.
As Terry said, get some tax advice.
Benny
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This reply was modified 9 years, 10 months ago by Benny.
Hi Callie,
Sounds to me like a chat with your Solicitor (or one on here) would pay dividends. As I understand it, Company title means that the whole apartment block is owned as a single entity. Thus, to someone wanting to buy a single apartment, it is a bit like selling/buying one bedroom of someone’s house !!! ?????There are $$ to be made by buying a whole apartment block which is on Company title, then creating strata titles for each and every apartment. Once strata’ed, they can be sold off individually. Hoops to jump through, and costs, but the value of each apartment then leaps accordingly.
Hopefully, one of our resident gurus will drop by and can add more (or correct me if I have anything wrong… *eek* :p) For now though, the word I’d use would be “Caution” !!
Benny
PS I just spotted your other thread – there are some replies in there from others:-
https://www.propertyinvesting.com/topic/4991717-company-title-help-needed/-
This reply was modified 9 years, 10 months ago by Benny.
Hi Ollie,
As Terryw said:-If you want to prepay interest then you have to be charged the interest before 30June of it will fall over next year.
If you were planning on paying a year in advance, this would save you about $800 (based on a $400k loan with a 0.2% Interest saving – I think that is around the norm, yeah?) But, if you were to NOT pay the Interest amount in advance, these funds could instead be sitting in an Offset Account saving you Interest on a monthly basis anyway. How much would be saved?
It would be worth running the numbers (one way vs the other) to see the true outcome of each way. e.g. by having ~$20k offset against a $400k loan, your monthly interest paid would be 5% less than if you had no Offset. And, you are paying in (slightly) inflated $$, while retaining flexibility of your funds too.
Do the sums using YOUR figures though – and do let us know what transpires – I’d be keen to know, especially if one way is “streets ahead” of the other,
Benny
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This reply was modified 9 years, 10 months ago by Benny.
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This reply was modified 8 years, 2 months ago by
